What changed in this filing

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Item 1. Business

2026-09-29 compared with 2026-08-24 · 1067 added, 1094 removed, 68 unchanged (97% of the section changed)

We manufacture and trade bromine

and crude salt, natural gas, manufacture and sell chemical products used in oil and gas field explorations and papermaking chemical agents,

and materials for human and animal antibiotics.

To date, our products have been sold only within the People’s Republic of China.

As used in this report, the terms “we,” “us,” “our,” “Company” and “Gulf Resources”

refers to Gulf Resources, Inc., a holding company and/or its consolidated wholly-owned subsidiaries, and the terms “ton” and

“tons” refers to metric tons, in each case, unless otherwise stated or the context requires otherwise.

The functional currency of the

Company’s operating foreign subsidiaries is the Renminbi (“RMB”), which had an average exchange rate of $0.14204 and

$0.14042 during fiscal years 2023 and 2024, respectively, the reporting currency of the Company is the United States dollar (“USD”

Our Corporate History and Corporate Structure

We (Gulf Resources Inc.) were

originally incorporated in Delaware and subsequently re-incorporated in Nevada.

From November 1993 through August 2006, we were engaged

in the business of owning, leasing and operating coin and debit card pay-per copy photocopy machines, fax machines, microfilm reader-printers

and accessory equipment under the name “Diversifax, Inc.”.

Due to the increased use of internet services, demand for our services

declined sharply, and in August 2006, our Board of Directors decided to discontinue our operations.

Upper Class Group Limited, incorporated

in the British Virgin Islands in July 2006, acquired all the outstanding stock of Shouguang City Haoyuan Chemical Company Limited (“SCHC”),

a company incorporated in Shouguang City, Shandong Province, the People’s Republic of China (the “PRC”), in May 2005.

manufacture and trade bromine and crude salt, natural gas, manufacture and sell chemical products used in oil and gas field explorations

and papermaking chemical agents, and materials for human and animal antibiotics.

To date, our products have been sold only within the

People’s Republic of China.

As used in this report, the terms “we,” “us,” “our,” “Company”

and “Gulf Resources” refers to Gulf Resources, Inc., a holding company and/or its consolidated wholly-owned subsidiaries,

and the terms “ton” and “tons” refers to metric tons, in each case, unless otherwise stated or the context requires

functional currency of the Company’s operating foreign subsidiaries is the Renminbi (“RMB”), which had an average exchange

rate of $0.14042 and $0.13999 during fiscal years 2024 and 2025, respectively, the reporting currency of the Company is the United States

dollar (“USD” or $”).

Corporate History and Corporate Structure

(Gulf Resources Inc.) were originally incorporated in Delaware and subsequently re-incorporated in Nevada.

From November 1993 through

August 2006, we were engaged in the business of owning, leasing and operating coin and debit card pay-per copy photocopy machines, fax

machines, microfilm reader-printers and accessory equipment under the name “Diversifax, Inc.”.

Due to the increased use of

internet services, demand for our services declined sharply, and in August 2006, our Board of Directors decided to discontinue our operations.

Class Group Limited, incorporated in the British Virgin Islands in July 2006, acquired all the outstanding stock of Shouguang City Haoyuan

Chemical Company Limited (“SCHC”), a company incorporated in Shouguang City, Shandong Province, the People’s Republic

of China (the “PRC”), in May 2005.

At the time of the acquisition, members of the family of Mr.

Ming Yang, our president and former chief executive officer, owned approximately

63.20% of the outstanding shares of Upper Class Group Limited.

Since the ownership of Upper Class Group Limited and SCHC was then substantially

the same, the acquisition was accounted for as a transaction between entities under common control, whereby Upper Class Group Limited

recognized the assets and liabilities transferred at their carrying amounts.

On December 12, 2006, our Company,

then known as Diversifax, Inc., a public “shell” company, acquired Upper Class Group Limited and SCHC.

Under the terms of

the agreement, the stockholders of Upper Class Group Limited received 13,250,000 (restated for the 2- for-1 stock split in 2007 and the

1-for-4 stock split in 2009) shares of our voting common stock in exchange for all outstanding shares of Upper Class Group Limited.

of the Yang family received approximately 62% of our common stock as a result of the acquisition.

Under accounting principles generally

accepted in the United States, the share exchange is considered to be a capital transaction rather than a business combination.

the share exchange is equivalent to the issuance of stock by Upper Class Group Limited for the net assets of Gulf Resources, Inc., accompanied

by a recapitalization, and is accounted for as a change in capital structure.

Accordingly, the accounting for the share exchange is identical

to that resulting from a reverse acquisition, except no goodwill is recorded.

Under reverse takeover accounting, the post reverse acquisition

comparative historical consolidated financial statements of the legal acquirer, Diversifax, Inc., are those of the legal acquiree, Upper

Class Group Limited.

Share and per share amounts stated have been retroactively adjusted to reflect the share exchange.

On February 20,

2007, we changed our corporate name to Gulf Resources, Inc.

On February 5, 2007, we

acquired Shouguang Yuxin Chemical Industry Co., Limited (“SYCI”), a company incorporated in the People’s Republic

Under the terms of the acquisition agreement, the stockholders of SYCI received a total of 8,094,059 (restated for the

2-for-1 stock split in 2007 and the 1-for-4 stock split in 2009) shares of common stock of Gulf Resources, Inc., in exchange for all

Ming Yang, our president

and former chief executive officer, owned approximately 63.20% of the outstanding shares of Upper Class Group Limited.

Since the ownership

of Upper Class Group Limited and SCHC was then substantially the same, the acquisition was accounted for as a transaction between entities

under common control, whereby Upper Class Group Limited recognized the assets and liabilities transferred at their carrying amounts.

December 12, 2006, our Company, then known as Diversifax, Inc., a public “shell” company, acquired Upper Class Group Limited

Under the terms of the agreement, the stockholders of Upper Class Group Limited received 13,250,000 (restated for the 2- for-1

stock split in 2007 and the 1-for-4 stock split in 2009) shares of our voting common stock in exchange for all outstanding shares of

Upper Class Group Limited.

Members of the Yang family received approximately 62% of our common stock as a result of the acquisition.

Under accounting principles generally accepted in the United States, the share exchange is considered to be a capital transaction rather

than a business combination.

That is, the share exchange is equivalent to the issuance of stock by Upper Class Group Limited for the

net assets of Gulf Resources, Inc., accompanied by a recapitalization, and is accounted for as a change in capital structure.

the accounting for the share exchange is identical to that resulting from a reverse acquisition, except no goodwill is recorded.

reverse takeover accounting, the post reverse acquisition comparative historical consolidated financial statements of the legal acquirer,

Diversifax, Inc., are those of the legal acquiree, Upper Class Group Limited.

Share and per share amounts stated have been retroactively

adjusted to reflect the share exchange.

On February 20, 2007, we changed our corporate name to Gulf Resources, Inc.

February 5, 2007, we acquired Shouguang Yuxin Chemical Industry Co., Limited (“SYCI”), a company incorporated in the People’s

Republic of China.

Under the terms of the acquisition agreement, the stockholders of SYCI received a total of 8,094,059 (restated for

the 2-for-1 stock split in 2007 and the 1-for-4 stock split in 2009) shares of common stock of Gulf Resources, Inc.

in exchange for all

outstanding shares of SYCI’s common stock.

Simultaneously with the completion of the acquisition, a dividend of $2,550,000 was

paid to the former stockholders of SYCI.

Simultaneously with the completion of the acquisition, a dividend of

was paid to the former stockholders of SYCI.

At the time of the acquisition, approximately 49.1% of the outstanding shares of SYCI were

Yang’s wife, and the remaining 50.9% of the outstanding shares of SYCI were owned by SCHC, all of whose

outstanding shares were owned by Mr.

Yang’s wife, and the remaining 50.9% of the outstanding shares of SYCI were owned by SCHC, all of whose outstanding

shares were owned by Mr.

Yang and his wife.

Since the ownership of Gulf Resources, Inc.

and SYCI are substantially the

same, the acquisition was accounted for as a transaction between entities under common control, whereby Gulf Resources, Inc.

recognized the assets and liabilities of SYCI at their carrying amounts.

Share and per share amounts have been retroactively

adjusted to reflect the acquisition.

To satisfy certain ministerial

requirements necessary to confirm certain government approvals required in connection with the acquisition of SCHC by Upper Class Group

Limited, all of the equity interest of SCHC were transferred to a newly formed Hong Kong corporation named Hong Kong Jiaxing Industrial

Limited (“Hong Kong Jiaxing”) all of the outstanding shares of which are owned by Upper Class Group Limited.

of all of the equity interest of SCHC to Hong Kong Jiaxing received approval from the local State Administration of Industry and Commerce

on December 10, 2007.

As a result of the transactions

described above, our corporate structure is linear.

That is Gulf Resources owns 100% of the outstanding shares of Upper Class Group Limited,

which owns 100% of the outstanding shares of Hong Kong Jiaxing, which owns 100% of the outstanding shares of SCHC, which owns 100% of

the outstanding shares of SYCI.

Further, as a result of our acquisitions of SCHC and SYCI, our historical consolidated financial statements,

as contained in our Consolidated Financial Statements and Management’s Discussion and Analysis, appearing elsewhere in the report,

reflect the accounts of SCHC and SYCI.

On January 12, 2015, the Company

and SCHC entered into an Equity Interest Transfer Agreement with Shouguang City Rongyuan Chemical Co., Ltd (“SCRC”), pursuant

to which SCHC agreed to acquire SCRC and all rights, title and interest in and to all assets owned by SCRC, a leading manufacturer of

materials for human and animal antibiotics in China and other parts of Asia.

On February 4, 2015, the Company

closed the transactions contemplated by the agreement between the Company, SCHC and SCRC.

On the closing Date, the Company issued 7,268,011

shares of its common stock, par value $0.0005 per share (the “Shares”), at the closing market price of $1.84 per Share on

the closing date to the four former equity owners of SCRC .The issuance of the Shares was exempt from registration pursuant to Regulation

S of the Securities Act of 1933, as amended.

On the Closing Date, the Company entered into a lock-up agreement with the four former equity

owners of SCRC.

In accordance with the terms of the lock-up agreement, the shareholders agreed not to sell or transfer the Shares for

five years from the date the stock certificates evidencing the Shares were issued.

The sellers of SCRC agreed as

part of the purchase price to accept the Shares, based on a valuation of $10.00 (restated for the 1-for-5 reverse stock split in January

2020), which was a 73% premium to the price on the day the agreement was reached.

For accounting purposes, the Shares were valued at $9.20

(restated for the 1-for-5 reverse stock split in January 2020), which was the closing price of our common stock on the closing date of

the agreement.

The price difference between the original sale price of $10.00 (restated for the 1-for-5 reverse stock split in January

2020) and the $9.20 (restated for the 1-for-5 reverse stock split in January 2020) closing price of our stock on the closing date of the

agreement is solely for accounting purposes.

and SYCI are substantially the same, the acquisition

was accounted for as a transaction between entities under common control, whereby Gulf Resources, Inc.

recognized the assets and liabilities

of SYCI at their carrying amounts.

Share and per share amounts have been retroactively adjusted to reflect the acquisition.

satisfy certain ministerial requirements necessary to confirm certain government approvals required in connection with the acquisition

of SCHC by Upper Class Group Limited, all of the equity interest of SCHC were transferred to a newly formed Hong Kong corporation named

Hong Kong Jiaxing Industrial Limited (“Hong Kong Jiaxing”) all of the outstanding shares of which are owned by Upper Class

Group Limited.

The transfer of all of the equity interest of SCHC to Hong Kong Jiaxing received approval from the local State Administration

of Industry and Commerce on December 10, 2007.

a result of the transactions described above, our corporate structure is linear.

That is Gulf Resources owns 100% of the outstanding

shares of Upper Class Group Limited, which owns 100% of the outstanding shares of Hong Kong Jiaxing, which owns 100% of the outstanding

shares of SCHC, which owns 100% of the outstanding shares of SYCI.

Further, as a result of our acquisitions of SCHC and SYCI, our historical

consolidated financial statements, as contained in our Consolidated Financial Statements and Management’s Discussion and Analysis,

appearing elsewhere in the report, reflect the accounts of SCHC and SYCI.

January 12, 2015, the Company and SCHC entered into an Equity Interest Transfer Agreement with Shouguang City Rongyuan Chemical Co.,

Ltd (“SCRC”), pursuant to which SCHC agreed to acquire SCRC and all rights, title and interest in and to all assets owned

by SCRC, a leading manufacturer of materials for human and animal antibiotics in China and other parts of Asia.

February 4, 2015, the Company closed the transactions contemplated by the agreement between the Company, SCHC and SCRC.

On the closing

Date, the Company issued 7,268,011 shares of its common stock, par value $0.0005 per share (the “Shares”), at the closing

market price of $1.84 per Share on the closing date to the four former equity owners of SCRC .The issuance of the Shares was exempt from

registration pursuant to Regulation S of the Securities Act of 1933, as amended.

On the Closing Date, the Company entered into a lock-up

agreement with the four former equity owners of SCRC.

In accordance with the terms of the lock-up agreement, the shareholders agreed

not to sell or transfer the Shares for five years from the date the stock certificates evidencing the Shares were issued.

sellers of SCRC agreed as part of the purchase price to accept the Shares, based on a valuation of $10.00 (restated for the 1-for-5 reverse

stock split in January 2020), which was a 73% premium to the price on the day the agreement was reached.

For accounting purposes, the

Shares were valued at $9.20 (restated for the 1-for-5 reverse stock split in January 2020), which was the closing price of our common

stock on the closing date of the agreement.

The price difference between the original sale price of $10.00 (restated for the 1-for-5

reverse stock split in January 2020) and the $9.20 (restated for the 1-for-5 reverse stock split in January 2020) closing price of our

stock on the closing date of the agreement is solely for accounting purposes.

There has been no change in the number of shares issued.

On November 24, 2015, Gulf Resources,

Inc., a Delaware corporation, consummated a merger with and into its wholly-owned subsidiary, Gulf Resources, Inc., a Nevada corporation.

November 24, 2015, Gulf Resources, Inc., a Delaware corporation, consummated a merger with and into its wholly-owned subsidiary, Gulf

Resources, Inc., a Nevada corporation.

As a result of the reincorporation, the Company is now a Nevada corporation.

On December 15, 2015, the Company

incorporated a new subsidiary in the Sichuan Province of the PRC named Daying County Haoyuan Chemical Company Limited (“DCHC”)

with registered capital of RMB50,000,000, and there was RMB14,848,730 capital contributed by SCHC as of December 31, 2021.

DCHC was established

to further explore and develop natural gas and brine resources (including bromine and crude salt) in China.

On September 2, 2016, the Company

announced the planned merger of two of its 100% owned subsidiaries, SYCI and SCRC.

On March 24, 2017, the legal process of the merger

was completed and SCRC was officially deregistered on March 28, 2017.

The results of these two subsidiaries were reported under SYCI in

the fiscal year 2018.

On January 27, 2020, we completed

a 1-for-5 reverse stock split of our common stock, such that for each five shares outstanding prior to the stock split there was one share

outstanding after the reverse stock split.

All shares of common stock referenced in this report have been adjusted to reflect the stock

split figures.

On January 28, 2020, our shares began trading on the NASDAQ Global Select Market under the new CUSIP # 40251W.

In April 2022, Shouguang Hengde

Salt Industry Co.

Ltd, our subsidiary, was incorporated in Shandong Province, China, for crude salt production and trading.

Recent Developments

Acquisition Agreements

In June 2024, a wholly owned subsidiary of the Company,

Shouguang Hengde Salt Industry Co.

Ltd ( “SHSI”) entered into crude salt field acquisition agreements with Shouguang Qingshuibo

Farm Co., LTD.

(“Seller A”), Shouguang city Yangkou town Dingjia Zhuangzi village stock economic cooperative (“Seller

B”), Shouguang city Yangkou town Shanjia Zhuangzi village stock economic cooperative (“Seller C”), Shouguang City Yangkou

town Zhengjia Zhuangzi village stock economic cooperative (“Seller D”), and Shouguang city Yangkou town Renjia Zhuangzi village

stock economic cooperative (“Seller E”), respectively, as amended in December 2024.

A summary of these agreements is set

On June 26, 2024, SHSI entered into an acquisition

agreement with Seller A, pursuant to which Seller A agrees to transfer to SHSI, and SHSI agrees to purchase, 2,380,000 square meters of

crude salt field (including the land lease fee) for RMB54.40 per square meter, with the total transfer price of RMB129,472,000.

of transfer is from June 29, 2024, to June 28, 2044.

80% of the transfer price shall be paid upon the execution of the agreement, and the

remaining 20% shall be paid in shares of common stock of the Company within three months from the date of the agreement after SHSI has

inspected the and accepted the crude salt field in writing.

Subsequently, on December

17, 2024, the parties entered into an amendment to the agreement, pursuant to which the Article 2.

2 of the agreement has been amended

eighty percent (80%) of the total amount, equaling RMB103,577,600 had been paid on the date of signing the contract by both

The remaining RMB25,894,400 shall be paid in a combination of common stock of the Company and cash as follows:

(1) RMB10,357,800

shall be paid in shares, calculated on a per share price of US$1.5, using the exchange rate RMB/US$:7.27.

These shares shall be issued

by the Company to Seller A or Seller A's designated parties within three months after SHSI has inspected and accepted the crude salt field

(2) the balance shall be paid in cash before December 31, 2028.

On June 27, 2024, SHSI entered into an acquisition

agreement with each Seller B, Seller C, Seller D and Seller E, respectively, pursuant to which the sellers agreed to transfer to SHSI,

and SHSI agrees to purchase from the sellers, 750,000, 804,000, 385,000, and 822,000 square meters of crude salt field (including the

land lease fee) for RMB54.10, RMB54.90, RMB54.00, and RMB55.70 per square meter, respectively, with the total transfer price of RMB40,575,000,

RMB44,139,600, RMB20,790,000, and RMB45,785,400, respectively.

The term of transfers is from June 29, 2024 to June 28, 2044.

transfer price shall be paid upon the execution of the agreements, and the remaining 20% shall be paid in shares of common stock of the

Company within three months from the date of the agreements after SHSI has inspected them and accepted the crude salt fields in writing.

December 17, 2024, SHSI entered into an amendment to the acquisition agreement with Seller B, pursuant to which the Article 2.

agreement has been amended as follows:

(80%) of the total amount, equaling RMB32,460,000 had been paid on the date of signing the contract

by both parties.

The remaining RMB8,115,000 shall be paid in a combination of common stock of the Company and cash as follows:

(1) RMB3,246,000

shall be paid in shares, calculated on a per share price of US$1.5, using the exchange rate RMB/US$:7.27.

These shares shall be issued

by the Company to Seller B or Seller B’s designated parties within three months after SHSI has inspected and accepted the crude

salt field in writing;

(2) the balance shall be paid in cash before December 31, 2028.

December 17, 2024, SHSI entered into an amendment to the acquisition agreement with Seller C, pursuant to which the Article 2.

agreement has been amended as follows:

Eighty percent (80%) of the total amount, equaling RMB35,311,680 had been paid on the date of signing

the contract by both parties.

The remaining RMB8,827,920 shall be paid in a combination of common stock of the Company and cash as follows:

(1) RMB3,531,168 shall be paid in shares, calculated on a per share price of US$1.5 per, using the exchange rate RMB/US$:7.27.

shall be issued by the Company to Seller C or Seller C's designated parties within three months after SHSI has inspected and accepted

the crude salt field in writing;

(2) the balance shall be paid in cash before December 31, 2028.

On December 17, 2024,

SHSI entered into an amendment to the acquisition agreement with Seller D, pursuant to which the Article 2.

2 of the agreement has been

amended as follows:

Eighty percent (80%) of the total amount, equaling RMB 16,632,000 had been paid on the date of signing the contract

by both parties.

The remaining RMB 4,158,000 shall be paid in a combination of common stock of the Company and cash as follows:

(1) RMB1,663,200

shall be paid in shares, calculated on a per share price ofUS$1.5, using the exchange rate RMB/US$:7.27.

These shares shall be issued

by the Company to Seller D or Seller D's designated parties within three months after SHSI has inspected and accepted the crude salt field

(2) the balance shall be paid in cash before December 31, 2028.

On December 17, 2024, SHSI

entered into an amendment to the acquisition agreement with Seller E, pursuant to which the Article 2.

2 of the agreement has been amended

Eighty percent (80%) of the total amount, equaling RMB36,628,320 had been paid on the date of signing the contract by both

The remaining RMB9,157,080 shall be paid in a combination of common stock of the Company and cash as follows:

(1) RMB3,662,832

shall be paid in shares, calculated on a per share price of US$1.5, using the exchange rate RMB/US$:7.27.

These shares shall be issued

by the Company to Seller E or Seller E's designated party within three months after SHSI has inspected and accepted the crude salt field

(2) the balance shall be paid in cash by SHSI to Seller E before December 31, 2028.

In accordance to each amendment,

the parties also acknowledged and agreed that, in compliance with the Nasdaq Listing Rule 5635, the issuance of shares pursuant to the

agreement may not exceed 19.9% of the total outstanding shares of common stock of the Company prior to the issuance of the shares (the

“19.9% Threshold”), unless such issuance is approved by the shareholders of the Company in accordance with the Nasdaq rules

and regulations.

SHSI shall cause the Company to take all necessary steps to obtain such shareholder approval if the issuance of shares

under the agreement exceeds the 19.9% Threshold.

On December 30, 2024, SHSI

and each of the sellers mutually acknowledged and confirmed that the salt land provided by each seller meets the acquisition criteria,

is in the anticipated usable condition, and has been accepted and handed over to SHSI.

On February 28, 2025, the

transactions as contemplated by the acquisition agreements were closed.

On the closing date, the Company issued a total of 2,059,694 shares

of the Company’s common stock at a price of $1.50 per share, to five individuals, who are citizens residing in the People’s

Republic of China, designated by each seller.

Nasdaq Compliance

Company received a notice (the “Initial Notice”) from the Listing Qualifications Department of The Nasdaq Stock Market LLC

(“Nasdaq”) on April 18, 2024 notifying the Company that due to the Company’s failure to timely file its Annual Report

December 15, 2015, the Company incorporated a new subsidiary in the Sichuan Province of the PRC named Daying County Haoyuan Chemical

Company Limited (“DCHC”) with registered capital of RMB50,000,000, and there was RMB14,848,730 capital contributed by SCHC

as of December 31, 2021.

DCHC was established to further explore and develop natural gas and brine resources (including bromine and crude

salt) in China.

September 2, 2016, the Company announced the planned merger of two of its 100% owned subsidiaries, SYCI and SCRC.

On March 24, 2017,

the legal process of the merger was completed and SCRC was officially deregistered on March 28, 2017.

The results of these two subsidiaries

were reported under SYCI in the fiscal year 2018.

January 27, 2020, we completed a 1-for-5 reverse stock split of our common stock, such that for each five shares outstanding prior to

the stock split there was one share outstanding after the reverse stock split.

All shares of common stock referenced in this report have

been adjusted to reflect the stock split figures.

On January 28, 2020, our shares began trading on the NASDAQ Global Select Market under

the new CUSIP # 40251W.

April 2022, Shouguang Hengde Salt Industry Co.

Ltd, our subsidiary, was incorporated in Shandong Province, China, for crude salt production

October 27, 2025, the Company completed a 1-for-10 reverse stock split of our common stock, such that for each ten shares outstanding

prior to the stock split there was one share outstanding after the reverse stock split.

All shares of common stock referenced in this

report have been adjusted to reflect the stock split figures.

On October 27, 2025, our shares began trading on the NASDAQ Global Select

Market under the new CUSIP # 40251W507.

May 6, 2025, the Company was notified by the Listing Qualifications Staff of The Nasdaq Stock Market LLC that the Staff granted the Company’s

request to transfer the listing of its common stock, par value $0.0005 per share, from The Nasdaq Global Select Market tier to The Nasdaq

Capital Market tier.

On October 27, 2025, our shares began trading on the Nasdaq Capital Market under the same symbol “GURE”.

November 12, 2025, the Company issued a press release providing certain updates on its hearing scheduling process with the Nasdaq Hearings

The Company has received a hearing notification letter from Nasdaq scheduling an oral hearing for December 9, 2025.

As of November

10, 2025, the Company’s common stock had maintained the requisite closing bid price in compliance with Listing Rule 5550(a)(2).

In light of the above and in accordance with the instructions provided by the hearing notification letter, the Company has submitted

a request to cancel the hearing, subject to the Company’s Listing Analyst review and confirmation.

December 1, 2025, the Company received a letter from The Nasdaq Stock Market, LLC stating that the Company had regained compliance with

the minimum bid price requirement for continued listing on The Nasdaq Capital Market, as set forth in Nasdaq Listing Rule 5550(a)(2).

Consequently, the hearing before the Hearings Panel scheduled to take place on December 9, 2025 has been cancelled.

The Company’s

securities will continue to be listed and traded on The Nasdaq Stock Market.

December 2, 2025, the Company issued a press release announcing that it has regained compliance with the minimum bid price requirement

for continued listing on The Nasdaq Capital Market.

December 10, 2025, Shouguang City Haoyuan Chemical Company Limited, an indirect wholly owned subsidiary of Gulf Resources, Inc.

“Company”), entered into an equity transfer agreement to sell 100% of the equity interests in Shouguang Yuxin Chemical Industry

Co., Limited to Shandong Rongyuan Pharmaceutical Co., Ltd.

for aggregate consideration of RMB 21.2 million, payable in instalments through

The Company’s board of directors reviewed and affirmed the terms of the transaction, concluding that the sale is fair to

and in the best interests of the Company and its shareholders.

The disposition removes the operational and financial burdens associated

with the prolonged suspension of the Yuxin Chemical facility and enables the Company to reallocate resources to its other, more profitable

business segments.

The transaction closed on December 22, 2025 following completion of the required governmental registration changes.

December 18, 2025, the Company announced that, pursuant to a notice dated December 15, 2025 from the Shouguang Municipal People’s

Government Office (the “Government of Shouguang City”), it would temporarily suspend relevant operations in Shouguang City

to comply with local regulatory requirements.

The Company characterized the suspension as seasonal in nature and aligned with the Government

of Shouguang City’s objectives for the orderly extraction, effective utilization, and comprehensive development of brine resources,

as well as the protection of the ecological environment.

The Company further noted that bromine demand typically declines during the

Chinese New Year holiday period and that crude salt processing becomes more difficult in winter due to lower temperatures, which mitigated

the commercial impact of the temporary shutdown.

Operations in Shouguang City subsequently resumed on March 2, 2026 in compliance with

the same government notice.

December 22, 2025, the transaction previously announced on December 10, 2025 to sell 100% of the equity interests in Shouguang Yuxin

Chemical Industry Co., Limited by Shouguang City Haoyuan Chemical Company Limited, an indirect wholly owned subsidiary of Gulf Resources,

(the “Company”), to Shandong Rongyuan Pharmaceutical Co., Ltd.

closed following completion of the industrial and commercial

change registration by the relevant Administration for Market Regulation (AMR), which recorded the Purchaser as the sole shareholder

of the Target Company.

The Company had previously disclosed the terms of the equity transfer agreement and related matters in its Current

Report on Form 8-K filed with the SEC on December 15, 2025.

March 2, 2026, the Company announced that as previously reported on its Form 8-K filed on December 18, 2025, it had temporarily suspended

certain operations in Shouguang City in compliance with a seasonal government notice (the “Notice”) issued by the Government

of Shouguang City to support the orderly extraction, effective utilization, and comprehensive development of brine resources and the

protection of the ecological environment, and that such operations have now resumed in compliance with the Notice.

January 26, 2026, March 5, 2026, March 19, 2026 and March 28, 2026, respectively, the Company entered into equity financing agreements

(individually the “Private Placement Agreement”;

collectively the “Private Placement Agreements”), with four

individual investors (individually the “Private Placement Purchaser”;

collectively “Private Placement Purchasers”),

pursuant to which the Company agreed to issue new shares of common stock to such investors that in aggregate accounted for approximately

18% of the total shares issued and outstanding of the Company as of December 31, 2025.

The purchase price per share under the Private

Placement Agreement dated January 26, 2026, was set at 90% of the average closing price of the Company’s common stock for the five

trading days prior to the date of such agreement, while the purchase prices under the Private Placement Agreements executed in March

2026 were set at 85% of, or 15% off, the closing price of the Company’s common stock on the trading day immediately preceding the

respective agreement dates, as quoted on the Nasdaq Stock Market.

For more information, see the Current Report on Form 8-K of the Company

filed with the Securities Exchange Commission, or the SEC.

April 23, 2026, the Company received a notice (the “Initial Notice”) from the Listing Qualifications Department of The Nasdaq

Stock Market LLC (“Nasdaq”) notifying the Company that due to the Company’s failure to timely file its Annual Report

on Form 10-K for the fiscal year ended December 31, 2025 (the “Form 10-K”), with the SEC, the Company was not in compliance

6 unchanged sentences

had until June 22, 2026 to submit to Nasdaq a plan to regain compliance with the Rule.

May 26, 2026, Gulf Resources (the “Company”) received a notice (the “Notice”) from the Listing Qualifications

Department of The Nasdaq Stock Market LLC (“Nasdaq”), indicating that, as a result of not having timely filed its quarterly

report on Form 10-Q for the quarter ended March 31, 2026 (the “Form 10-Q”), and the Company remains delinquent in filing

its annual report on Form 10-K for the year ended December 31, 2025 (the “Initial Delinquent Filing”), the Company is in

non-compliance with Nasdaq Listing Rule 5250(c)(1), which requires timely filing all required periodic financial reports with the Securities

Exchange Commission.

June 1, 2026, Gulf Resources (the “Company”), following the Company’s ongoing dialogue with the staff of the United

States Securities and Exchange Commission, concluded that the Company will amend its fiscal year 2024 Form 10-K (the “FY2024 Form

10-K”) and Form 10-Qs for the first, second and third quarters of 2025 (collectively, the “Q1, Q2 and Q3 2025 Form 10-Qs”)

to restate the disclosures (Note 6, Note 7 and Note 12 included in the FY2024 Form 10-K and the Q1, Q2 and Q3 2025 Form 10-Qs) to revise

the previous recognition of buildings without ownership certificates as fixed assets in the balance sheets and to reclassify such buildings

as right-of-use (ROU) assets based on lease agreements and ASC 842 Leases, for each of the periods included in those filing, including

fiscal years 2023 and 2024 in the FY2024 Form 10-K and each of the quarterly and year-to-date periods included in the Q1, Q2 and Q3 FY2025

Form 10-Qs (collectively, the “Prior Filings”).

The Prior Filings should no longer be relied upon because of errors identified

in such financial statements, as described above.

connection with the identification of the above mentioned restatement, the Company delayed the completion of its fiscal year 2025 Form

10-K and Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, and filed a Form 12b-25 (Notice of Late Filing) with the

Securities and Exchange Commission to provide notice of such delay to the SEC and its shareholders.

June 25, 2026, the Company received a letter from Nasdaq indicating that, based on its further review and the plan of compliance submitted

by the Company on June 14, 2024, Nasdaq determined to grant an exception to enable the Company to regain compliance with the Listing Rule

5250(c)(1) Rule.

by the Company on June 17, 2026, Nasdaq determined to grant an exception to enable the Company to regain compliance with the Listing

Rule 5250(c)(1) Rule.

The terms of the exception were as follows:

on or before October 14, 2024, the Company must file the Delinquent Reports,

as required by the Listing Rule 5250(c)(1) Rule.

In the event the Company does not satisfy the terms, Nasdaq will provide written notification

that its securities will be delisted.

on or before August 31, 2026, the Company must file the Delinquent

Reports, as required by the Listing Rule 5250(c)(1) Rule.

In the event the Company does not satisfy the terms, Nasdaq will provide written

notification that its securities will be delisted.

At that time, the Company may appeal Nasdaq’s determination to a hearings panel.

Subsequently,

on August 20, 2024, the Company received a notice (the “August Notice”) from Nasdaq indicating that, because the Company is

delinquent in filing its quarterly report on Form 10-Q for the period ended June 30, 2024 (the “Second Quarter Form 10-Q”),

the Company was not in compliance with the Rule.

The August Notice also indicates that as a result of this additional delinquency, the

Company must submit an update to its original plan to regain compliance with respect to the filing requirements.

The Company had until

September 4, 2024, to submit such update to Nasdaq.

October 15, 2024, the Company received written notice from Nasdaq that, as a result of the Company filing the Form 10-K, the First Quarter

Form 10-Q and the Second Quarter Form 10-Q with the SEC, the Staff has determined that the Company complies with the Listing Rule 5250(c)(1)

Rule and considers the matter to be closed.

November 5, 2024, the Company received a notice (“Price Deficiency Letter”) from Nasdaq stating that the Company was not in

compliance with Nasdaq Listing Rule 5450(a)(1) because the bid price for the Company’s common stock had closed below $1.00 per share

for the previous 34 consecutive business days (the “Minimum Bid Price Requirement”).

In accordance with Nasdaq Listing Rule

5810(c)(3)(A), the Company has been given 180 calendar days, or until May 5, 2025, to regain compliance with the Minimum Bid Price Requirement.

If at any time before May 5, 2025, the bid price of the Company’s common stock closes at $1.00 per share or more for a minimum of

10 consecutive business days, Nasdaq will provide written confirmation that the Company has achieved compliance.

In the event the Company

does not regain compliance, the Company may be eligible for additional time.

To qualify for the additional compliance period, the Company

will be required to (i) submit, no later than the expiration date, an on-line Transfer Application, (ii) submit a non-refundable $5,000

application fee, (iii) meet the continued listing requirement for the market value of its publicly held shares and all other continued

listing standards for The Nasdaq Stock Market, with the exception of the bid price requirement, and (iv) will need to provide written

notice of its intention to cure the deficiency during the second compliance period, by effecting a reverse stock split if necessary.

part of its review process, Nasdaq will make a determination of whether they believe the Company will be able to cure this deficiency.

Should Nasdaq conclude that the Company will not be able to cure the deficiency, or should the Company determine not to submit a transfer

application or make the required representation, the Staff will provide notice that the Company’s securities will be subject to

Nasdaq Price Deficiency Letter has no immediate impact on the listing of the Company’s common stock, which will continue to be listed

and traded on The Nasdaq Global Select Market, subject to the Company’s compliance with the other continued listing requirements

of The Nasdaq Stock Market.

Corporate Structure

Our current corporate structure chart

is set forth in the following diagram:

Currently, we operate our business

through our wholly-owned subsidiaries in China, including (i) Shouguang City Haoyuan Chemical Company Limited, or SCHC;

(ii) Shouguang

Yuxin Chemical Industry Co., Limited, or SYCI;

current corporate structure chart is set forth in the following diagram:

we operate our business through our wholly-owned subsidiaries in China, including (i) Shouguang City Haoyuan Chemical Company Limited,

(ii) Shouguang Yuxin Chemical Industry Co., Limited, or SYCI;

(iii) Daying County Haoyuan Chemical Co., Ltd., or DCHC;

and (iv) Shouguang Hengde Salt

Shouguang Hengde Salt Industry Co.

Limited, or SHSI, each a PRC company.

Our executive offices are located

at Level 11, Vegetable Building, Industrial Park of the East in Shouguang City, Shandong Province, P.R.C.

December 10, 2025, Shouguang City Haoyuan Chemical Company Limited (the “Seller”), an indirect wholly owned subsidiary of

Gulf Resources, Inc.

(the “Company”), entered into an equity transfer agreement (the “SPA”) with Shandong Rongyuan

Pharmaceutical Co., Ltd.

(the “Purchaser”) to sell 100% of the equity interests in Shouguang Yuxin Chemical Industry Co.,

Limited (the “Target Company”) for RMB 21.2 million, payable in instalments through 2028.

The Company’s board of directors

reviewed and approved the SPA, determining that its terms, including the consideration and payment arrangements, are fair and in the

best interests of the Company and its shareholders.

Given the prolonged suspension of operations at the Yuxin Chemical facility and its

adverse impact on performance, the Board believes that completing the sale will relieve the Company of related burdens and allow it to

focus on more profitable business segments.

previously reported, on December 10, 2025, Shouguang City Haoyuan Chemical Company Limited (the “Seller”), an indirect wholly

owned subsidiary of Gulf Resources, Inc.

(the “Company”), entered into an equity transfer agreement (the “SPA”)

with Shandong Rongyuan Pharmaceutical Co., Ltd.

(the “Purchaser”) to sell 100% of the equity interest in Shouguang Yuxin

Chemical Industry Co., Limited (the “Target Company”).

The industrial and commercial registration reflecting the Purchaser

as the sole shareholder of the Target Company was completed by the relevant governmental authority on December 22, 2025, marking the

closing of the transaction.

In connection with the closing, the Company filed a Current Report on Form 8-K on December 29, 2025, which

includes the Company’s audited financial statements for the year ended December 31, 2024, and unaudited financial statements for

the nine months ended September 30, 2025, together with related notes and pro forma financial information filed as Exhibit 99.1 of the

aforementioned Form 8-K filed on December 29, 2025.

executive offices are located at Level 11, Vegetable Building, Industrial Park of the East in Shouguang City, Shandong Province, P.R.C.

Our telephone number is +86 (536) 5670008.

+86 (536) 5670008.

Our website address is www.gulfresourcesinc.com.

The information contained on or accessed through our website is

not intended to constitute and shall not be deemed to constitute part of this Form 10-K.

Enforcement of Civil Liabilities under United States

Federal Securities Laws

Although the Company is a Nevada

corporation, most of the Company’s operations are and will be located outside of the United States and all Company directors and

officers reside outside the United States.

Moreover, a majority of Company assets are located outside the United States.

Since a majority

of the assets owned by the Company are located outside the United States, any judgment obtained in the United States against the Company

may not be collectible within the United States.

There is no treaty between the United States and China providing for the reciprocal recognition

and enforcement of judgments in civil and commercial matters and a final judgment for the payment of money rendered by any federal or

state court in the United States based on civil liability, whether or not predicated solely upon the federal securities laws, would, therefore,

not be automatically enforceable in China.

Under the PRC Civil Procedure Law, foreign shareholders may originate actions based on PRC

law against the Company in the PRC, if they can establish sufficient nexus to the PRC for a PRC court to have jurisdiction, and meet other

procedural requirements, including, among others, the plaintiff must have a direct interest in the case, and there must be a concrete

claim, a factual basis and a cause for the suit.

There is uncertainty as to whether

the courts of China would (1) recognize or enforce judgments of United States courts obtained against the Company or its directors or

officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States,

or (2) entertain original actions brought in each respective jurisdiction against the Company or its directors or officers predicated

upon the securities laws of the United States or any state in the United States.

The recognition and enforcement

of foreign judgments are provided under the PRC Civil Procedure Law.

PRC courts may recognize and enforce foreign judgments in accordance

with the requirements of the PRC Civil Procedure Law based either on treaties between China and the country where the judgment is made

or on principles of reciprocity between jurisdictions.

China does not have any treaties or other form of reciprocity with the United States

that provide for the reciprocal recognition and enforcement of foreign judgments.

In addition, according to the PRC Civil Procedure Law,

courts in China will not enforce a foreign judgment against the Company or its directors and officers if they decide that the judgment

violates the basic principles of PRC law or national sovereignty, security or public interest.

As a result, it is uncertain whether and

on what basis a PRC court would enforce a judgment rendered by a court in the United States.

Under the PRC Civil Procedure Law, foreign

shareholders may originate actions based on PRC law against the Company in the PRC, if they can establish sufficient nexus to the PRC

for a PRC court to have jurisdiction, and meet other procedural requirements, including, among others, the plaintiff must have a direct

interest in the case, and there must be a concrete claim, a factual basis and a cause for the suit.

In addition, it will be difficult

shareholders to originate actions against us in China in accordance with PRC laws because we are incorporated under the laws

of State of Nevada and it will be difficult for U.S.

shareholders, holding our common stock, to establish a connection to China for a

PRC court to have jurisdiction as required under the PRC Civil Procedure Law.

Recent Regulatory Developments in

We face various legal and operational

risks and uncertainties associated with having all of our operations in China and the complex and evolving PRC laws and regulations.

Chinese government has significant authority in regulating our operations and may intervene or influence our operations at any time, which

could result in a material adverse change in our operations and the value of our securities.

The PRC government has recently indicated

its intent to exert more oversight and control over offerings that are conducted overseas and foreign investment in China-based issuers.

Such action could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause

the value of such securities to significantly decline or be worthless.

For example, anti-monopoly regulators in China have promulgated

new anti-monopoly and competition laws and regulations and strengthened the enforcement under these laws and regulations.

uncertainties as to how the laws, regulations and guidelines recently promulgated will be implemented and whether these laws, regulations

and guidelines will have a material impact on our business, financial condition, results of operations and prospects.

If any non-compliance

is identified by relevant authorities, we may be subject to fines and other penalties.

See “Item 1A.

Risk Factors— Risks

Related to Doing Business in China—Because all of our operations are in China, our business is subject to the complex and rapidly

evolving laws and regulations there.

The Chinese government may exercise significant oversight and discretion over the conduct of our

business and may intervene in or influence our operations at any time, which could result in a material change in our operations and/or

the value of our common stock.”, “—if the Chinese government chooses to exert more oversight and control over offerings

that are conducted overseas and/or foreign investment in China-based issuers, such action could significantly limit or completely hinder

our ability to off er or continue to offer securities to investors and cause the value of such securities to significantly decline or

be worthless.” and “—If the Chinese government were to impose new requirements or approval from the PRC Authorities

to issue our common stock to foreign investors or list on a foreign exchange, such action could significantly limit or completely hinder

our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be

Recent statements by the Chinese

government have indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investments

in China based issuers.

Any future action by the Chinese government expanding the categories of industries and companies whose foreign

securities offerings are subject to government review could significantly limit or completely hinder our ability to offer or continue

to offer securities to investors and could cause the value of such securities to significantly decline or be worthless.

Recently, the PRC government initiated

a series of regulatory actions and made a number of public statements on the regulation of business operations in China with little advance

notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed

overseas using a variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding

efforts in anti-monopoly enforcement.

We do not believe that we are directly subject to these regulatory actions or statements, as we

do not have a variable interest entity structure and our business does not involve the collection of user data, implicate cybersecurity,

or involve any other type of restricted industry.

Because these statements and regulatory actions are new, however, it is highly uncertain

how soon legislative or administrative regulation making bodies in China will respond to them, or what existing or new laws or regulations

will be modified or promulgated, if any, or the potential impact such modified or new laws and regulations will have on our daily business

operations or our ability to accept foreign investments and list on an U.S.

On February 17, 2023, the China

Securities Regulatory Commission (‘CSRC”) released the Trial Measures for Administration of Overseas Securities Offerings

and Listings by Domestic Companies (the “Trial Measures”) and five supporting guidelines, which came into effect on March

Pursuant to the Trial Measures, domestic companies that seek to offer or list securities overseas, both directly and indirectly,

should fulfill the filing procedures and report relevant information to the CSRC.

If a domestic company fails to complete the filing procedures

or conceals any material fact or falsifies any major content in its filing documents, such domestic company may be subject to administrative

penalties by the CSRC, such as order to rectify, warnings, fines, and its controlling shareholders, actual controllers, the person directly

in charge and other directly liable persons may also be subject to administrative penalties, such as warnings and fines.

As a listed company,

we believe that we, and all of our PRC subsidiaries are not required to fulfill filing procedures and obtain approvals from the CSRC to

continue to offer our securities or operate our business as of the date of this annual report.

In addition, to date, none of us and our

PRC subsidiaries has received any filing or compliance requirements from CSRC for the listing of the Company at Nasdaq and all of its

overseas offerings.

Furthermore, based on our understanding of the current PRC laws, we believe that the CSRC’s approval is not

required to be obtained for the Company’s listing on Nasdaq;

however, there are substantial uncertainties regarding the interpretation

and application of the Regulation on Mergers and Acquisitions of Domestic Companies by Foreign Investors (“M&A Rules”),

other PRC Laws and future PRC laws and regulations, and there can be no assurance that any governmental agency will not take a view that

is contrary to or otherwise different from our belief stated herein.

On February 24, 2023, the

CSRC, the Ministry of Finance, the National Administration of State Secrets Protection and the National Archives Administration

jointly issued the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and

Listing by Domestic Companies, or the Confidentiality and Archives Provisions, which took effective from March 31, 2023.

Confidentiality and Archives Provisions specify that during the overseas securities offering and listing activities of domestic

companies, domestic companies and securities companies and securities service institutions that provide relevant securities business

shall, by strictly abiding by the relevant laws and regulations of the PRC and this Confidentiality and Archives Provisions,

institute a sound confidentiality and archives administration systems, take necessary measures to fulfill confidentiality and

archives administration obligations, and shall not divulge any national secrets, work secrets of governmental agencies and harm

national and public interests.

Confidentiality and Archives Provisions provide that it is applicable to initial public offerings as

well as other types of securities listing of PRC domestic enterprises, and any future issuance of securities and listing activities

after the initial listing.

Working papers generated in the PRC by securities companies and securities service providers that provide

relevant securities services for overseas issuance and listing of securities by domestic companies shall be kept in the PRC.

The information contained on or accessed

through our website is not intended to constitute and shall not be deemed to constitute part of this Form 10-K.

of Civil Liabilities under United States Federal Securities Laws

the Company is a Nevada corporation, most of the Company’s operations are and will be located outside of the United States and

all Company directors and officers reside outside the United States.

Moreover, a majority of Company assets are located outside the United

Since a majority of the assets owned by the Company are located outside the United States, any judgment obtained in the United

States against the Company may not be collectible within the United States.

There is no treaty between the United States and China providing

for the reciprocal recognition and enforcement of judgments in civil and commercial matters and a final judgment for the payment of money

rendered by any federal or state court in the United States based on civil liability, whether or not predicated solely upon the federal

securities laws, would, therefore, not be automatically enforceable in China.

Under the PRC Civil Procedure Law, foreign shareholders

may originate actions based on PRC law against the Company in the PRC, if they can establish sufficient nexus to the PRC for a PRC court

to have jurisdiction, and meet other procedural requirements, including, among others, the plaintiff must have a direct interest in the

case, and there must be a concrete claim, a factual basis and a cause for the suit.

is uncertainty as to whether the courts of China would (1) recognize or enforce judgments of United States courts obtained against the

Company or its directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any

state in the United States, or (2) entertain original actions brought in each respective jurisdiction against the Company or its directors

or officers predicated upon the securities laws of the United States or any state in the United States.

recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedure Law.

PRC courts may recognize and enforce

foreign judgments in accordance with the requirements of the PRC Civil Procedure Law based either on treaties between China and the country

where the judgment is made or on principles of reciprocity between jurisdictions.

China does not have any treaties or other form of reciprocity

with the United States that provide for the reciprocal recognition and enforcement of foreign judgments.

In addition, according to the

PRC Civil Procedure Law, courts in China will not enforce a foreign judgment against the Company or its directors and officers if they

decide that the judgment violates the basic principles of PRC law or national sovereignty, security or public interest.

it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States.

Under the PRC

Civil Procedure Law, foreign shareholders may originate actions based on PRC law against the Company in the PRC, if they can establish

sufficient nexus to the PRC for a PRC court to have jurisdiction, and meet other procedural requirements, including, among others, the

plaintiff must have a direct interest in the case, and there must be a concrete claim, a factual basis and a cause for the suit.

addition, it will be difficult for U.S.

shareholders to originate actions against us in China in accordance with PRC laws because we

are incorporated under the laws of State of Nevada and it will be difficult for U.S.

shareholders, holding our common stock, to establish

a connection to China for a PRC court to have jurisdiction as required under the PRC Civil Procedure Law.

Regulatory Developments in China

face various legal and operational risks and uncertainties associated with having all of our operations in China and the complex and

evolving PRC laws and regulations.

The Chinese government has significant authority in regulating our operations and may intervene or

influence our operations at any time, which could result in a material adverse change in our operations and the value of our securities.

The PRC government has recently indicated its intent to exert more oversight and control over offerings that are conducted overseas and

foreign investment in China-based issuers.

Such actions could significantly limit or completely hinder our ability to offer or continue

to offer securities to investors and cause the value of such securities to significantly decline or be worthless.

For example, anti-monopoly

regulators in China have promulgated new anti- monopoly and competition laws and regulations and strengthened the enforcement under these

laws and regulations.

There remain uncertainties as to how the laws, regulations and guidelines recently promulgated will be implemented

and whether these laws, regulations and guidelines will have a material impact on our business, financial condition, results of operations

and prospects.

If any non-compliance is identified by relevant authorities, we may be subject to fines and other penalties.

Risk Factors— Risks Related to Doing Business in China—Because all of our operations are in China, our business is subject

to the complex and rapidly evolving laws and regulations there.

The Chinese government may exercise significant oversight and discretion

over the conduct of our business and may intervene in or influence our operations at any time, which could result in a material change

in our operations and/or the value of our common stock.”, “—if the Chinese government chooses to exert more oversight

and control over offerings that are conducted overseas and/or foreign investment in China-based issuers, such action could significantly

limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to

significantly decline or be worthless.” and “—If the Chinese government were to impose new requirements for approval

from the PRC Authorities to issue our common stock to foreign investors or list on a foreign exchange, such action could significantly

limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to

significantly decline or be worthless.”

the PRC government initiated a series of regulatory actions and made a number of public statements on the regulation of business operations

in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over

China-based companies listed overseas using a variable interest entity structure, adopting new measures to extend the scope of cybersecurity

reviews, and expanding efforts in anti-monopoly enforcement.

We do not believe that we are directly subject to these regulatory actions

or statements, as we do not have a variable interest entity structure and our business does not involve the collection of user data,

implicate cybersecurity, or involve any other type of restricted industry.

Because these statements and regulatory actions are new, however,

it is highly uncertain how soon legislative or administrative regulation making bodies in China will respond to them, or what existing

or new laws or regulations will be modified or promulgated, if any, or the potential impact such modified or new laws and regulations

will have on our daily business operations or our ability to accept foreign investments and list on an U.S.

February 17, 2023, the China Securities Regulatory Commission (‘CSRC”) released the Trial Measures for Administration of

Overseas Securities Offerings and Listings by Domestic Companies (the “Trial Measures”) and five supporting guidelines, which

came into effect on March 31, 2023.

Pursuant to the Trial Measures, domestic companies that seek to offer or list securities overseas,

both directly and indirectly, should fulfill the filing procedures and report relevant information to the CSRC.

If a domestic company

fails to complete the filing procedures or conceals any material fact or falsifies any major content in its filing documents, such domestic

company may be subject to administrative penalties by the CSRC, such as order to rectify, warnings, fines, and its controlling shareholders,

actual controllers, the person directly in charge and other directly liable persons may also be subject to administrative penalties,

such as warnings and fines.

As a listed company, we believe that we, and all of our PRC subsidiaries are not required to fulfill filing

procedures and obtain approvals from the CSRC to continue to offer our securities or operate our business as of the date of this annual

In addition, to date, none of us and our PRC subsidiaries has received any filing or compliance requirements from CSRC for the

listing of the Company at Nasdaq and all of its overseas offerings.

Furthermore, based on our understanding of the current PRC laws,

we believe that the CSRC’s approval is not required to be obtained for the Company’s listing on Nasdaq;

however, there are

substantial uncertainties regarding the interpretation and application of the Regulation on Mergers and Acquisitions of Domestic Companies

by Foreign Investors (“M&A Rules”), other PRC Laws and future PRC laws and regulations, and there can be no assurance

that any governmental agency will not take a view that is contrary to or otherwise different from our belief stated herein.

February 24, 2023, the CSRC, the Ministry of Finance, the National Administration of State Secrets Protection and the National Archives

Administration jointly issued the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering

and Listing by Domestic Companies, or the Confidentiality and Archives Provisions, which took effective from March 31, 2023.

The Confidentiality

and Archives Provisions specify that during the overseas securities offering and listing activities of domestic companies, domestic companies

and securities companies and securities service institutions that provide relevant securities business shall, by strictly abiding by

the relevant laws and regulations of the PRC and this Confidentiality and Archives Provisions, institute a sound confidentiality and

archives administration systems, take necessary measures to fulfill confidentiality and archives administration obligations, and shall

not divulge any national secrets, work secrets of governmental agencies and harm national and public interests.

Confidentiality and Archives

Provisions provide that it is applicable to initial public offerings as well as other types of securities listing of PRC domestic enterprises,

and any future issuance of securities and listing activities after the initial listing.

Working papers generated in the PRC by securities

companies and securities service providers that provide relevant securities services for overseas issuance and listing of securities

by domestic companies shall be kept in the PRC.

Confidentiality and Archives Provisions provide no explicit definition of working papers.

In practice, the securities

companies’ working papers usually refer to various important information and work records related to the securities business

obtained and prepared by the securities companies and securities service providers and their representatives in the whole process of

the securities businesses, such as due diligence work.

Without the approval of relevant competent authorities, such as CSRC, MOF PRC

National Administration of State Secrets Protection, and National Archives Administration of China, depending on the nature and

transmission method of secrets, it shall not be transferred overseas.

Where documents or materials need to be transferred outside of

the PRC, it shall be subject to the approval procedures in accordance with relevant PRC regulations.

In practice, the securities companies’ working papers usually refer to various important information and work records related to

the securities business obtained and prepared by the securities companies and securities service providers and their representatives

in the whole process of the securities businesses, such as due diligence work.

Without the approval of relevant competent authorities,

such as CSRC, MOF PRC National Administration of State Secrets Protection, and National Archives Administration of China, depending on

the nature and transmission method of secrets, it shall not be transferred overseas.

Where documents or materials need to be transferred

outside of the PRC, it shall be subject to the approval procedures in accordance with relevant PRC regulations.

The relevant competent

authorities, such as, CSRC, MOF, PRC National Administration of State Secrets Protection, and National Archives Administration of

China will regulate, supervise and inspect pursuant to their respective statutory mandates over matters of Confidentiality and

Archives Administration concerning overseas offering and listing by domestic companies.

As Confidentiality and Archives

Administration is newly promulgated, there is substantial uncertainty regarding their specific requirements.

If we fail to comply

with related laws and regulations, we may be subject to fines, confiscation, blocking transmission or criminal offense.

taken measures to adopt management systems for the compliance of Confidentiality and Archives Provisions.

We believe our listing

does not involve national secrets, work secrets of governmental agencies and undermine national and public interests.

assurance that we will be able to meet all applicable regulatory requirements and guidelines, or comply with all applicable

regulations at all times, or that we will not be subject to fines or other penalties in the future as a result of regulatory

Cash Transfers and Dividend Distribution

Our corporate structure is a direct

holding structure, that is, the overseas entity listed in the U.S., Gulf Resources, Inc., a Nevada corporation (“Gulf Resources”),

controls SCHC (the “WFOE”), SYCI and DCHC through the Hong Kong company, Hong Kong Jiaxing Industrial Limited, or Hong Kong

Within our direct holding structure,

the cross-border transfer of funds within our corporate group is legal and compliant with the laws and regulations of the PRC.

investors’ funds can be directly transferred to Hong Kong Jiaxing, and then transferred to subordinate operating entities through

SCHC, or the WFOE.

If the Company intends to distribute

dividends, the Company will transfer the dividends to Hong Kong Jiaxing in accordance with the laws and regulations of the PRC, and then

Hong Kong Jiaxing will transfer the dividends to Gulf Resources, and the dividends will be distributed from Gulf Resources to all shareholders

respectively in proportion to the shares they hold, regardless of whether the shareholders are U.S.

investors or investors in other countries

In the reporting periods presented in this annual report,

no cash and other asset transfers have occurred among the Company and its subsidiaries;

and no dividend or distribution of a subsidiary

has been made to the Company or to the shareholders of the Company.

For the foreseeable future, the Company does not expect to pay any

cash dividends.

Our PRC subsidiaries’ ability

to distribute dividends is based upon their distributable earnings.

Current PRC regulations permit our PRC subsidiaries to pay dividends

to their respective shareholders only out of their accumulated profits, if any, determined in accordance with PRC accounting standards

and regulations.

In addition, each of our PRC subsidiaries is required to set aside at least 10% of its after-tax profits each year, if

any, to fund a statutory reserve until such reserve reaches 50% of each of their registered capitals.

These reserves are not distributable

as cash dividends.

To address persistent capital

outflows and the RMB’s depreciation against the U.S.

dollar in the fourth quarter of 2016, the People’s Bank of China and

the State Administration of Foreign Exchange, or SAFE, have implemented a series of capital control measures in the subsequent months,

including stricter vetting procedures for China-based companies to remit foreign currency for overseas acquisitions, dividend payments

and shareholder loan repayments.

The PRC government may continue to strengthen its capital controls and our PRC subsidiaries’ dividends,

and other distributions may be subject to tightened scrutiny in the future.

The PRC government also imposes controls on the conversion

of RMB into foreign currencies and the remittance of currencies out of the PRC.

Therefore, we may experience difficulties in completing

the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends from our profits, if any.

if our subsidiaries in the PRC incur debt on their own in the future, the instruments governing the debt may restrict their ability to

pay dividends or make other payments.

In addition, the Enterprise Income

Tax Law and its implementation rules provide that a withholding tax at a rate of 10% will be applicable to dividends payable by Chinese

companies to non-PRC-resident enterprises unless reduced under treaties or arrangements between the PRC central government and the governments

of other countries or regions where the non-PRC resident enterprises are tax resident.

Pursuant to the tax agreement between Mainland

China and the Hong Kong Special Administrative Region, the withholding tax rate in respect to the payment of dividends by a PRC enterprise

to a Hong Kong enterprise may be reduced to 5% from a standard rate of 10%.

However, if the relevant tax authorities determine that our

transactions or arrangements are for the primary purpose of enjoying a favorable tax treatment, the relevant tax authorities may adjust

the favorable withholding tax in the future.

Accordingly, there is no assurance that the reduced 5% withholding rate will apply to dividends

received by our Hong Kong subsidiary from our PRC subsidiaries.

This withholding tax will reduce the amount of dividends we may receive

from our PRC subsidiaries.

Please see “Risk Factors”

beginning on page 20 of this annual report for additional information.

Holding Foreign Company Accountable

Our common stock may be delisted from the Nasdaq under

the Holding Foreign Companies Accountable Act (“HFCAA”), if the PCAOB is unable to adequately inspect audit documentation

located in China, or investigate our auditor.

Furthermore, on June 22, 2021, the U.S.

Senate passed the Accelerating Holding Foreign Companies

Accountable Act, which was signed into law, and amends the HFCAA and requires the SEC to prohibit an issuer’s securities from trading

stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three.

GGF CPA LTD., Certified Public Accountants, is a China-based accounting firm registered with the PCAOB and is subject to laws in the

United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards.

Our auditor is headquartered in the China and is subject to inspection by the PCAOB on a regular basis.

On August 26, 2022, the PCAOB

signed the Protocol with the CSRC, and the MOF of the People’s Republic of China, governing inspections and investigations of audit

firms based in mainland China and Hong Kong.

The Protocol remains unpublished and is subject to further explanation and implementation.

Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB shall have independent discretion to select any

issuer audits for inspection or investigation and the unfettered ability to transfer information to the SEC.

On December 15, 2022, the

PCAOB announced that it was able to secure complete access to inspect and investigate PCAOB registered public accounting firms headquartered

in China mainland and Hong Kong completely in 2022.

The PCAOB Board vacated its previous 2021 determinations that the PCAOB was unable

to inspect or investigate completely registered public accounting firms headquartered in China mainland and Hong Kong.

However, whether

the PCAOB will continue to be able to satisfactorily conduct inspections of PCAOB-registered public accounting firms headquartered in

China mainland and Hong Kong is subject to uncertainty and depends on a number of factors out of our, and our auditor’s control.

The PCAOB is continuing to demand complete access in China mainland and Hong Kong moving forward and was already making plans to resume

regular inspections in early 2023 and beyond, as well as to continue pursuing ongoing investigations and initiate new investigations as

The PCAOB has indicated that it will act immediately to consider the need to issue new determinations with the HFCAA if needed.

Therefore, the PCAOB in the future may determine that it is unable to inspect or investigate completely registered public accounting firms

in mainland China and Hong Kong.

Our auditor’s working papers related to us, and our subsidiaries are located in China.

If our auditor

is not permitted to provide requested audit work papers located in China to the PCAOB, investors would be deprived of the benefits of

PCAOB’s oversight of our auditor through such inspections which could result in limitation or restriction to our access to the U.S.

capital markets and trading of our securities may be prohibited under the HFCAA, which would result in the delisting of our securities

from the Nasdaq.

See “ Risk Factors - Our common stock may be delisted from the Nasdaq under the Holding Foreign Companies Accountable

Act if the PCAOB is unable to adequately inspect audit documentation located in China.

The delisting of our common stock, or the threat

of their being delisted, may materially and adversely affect the value of your investment .”

Closure and rectification process

of our Bromine, Crude Salt and Chem i cal Products factories

On September 1, 2017, the Company

received letters from the People’s Government of Yangkou Town, Shouguang City to each of its subsidiaries, Shouguang City Haoyuan

Chemical Company Limited and Shouguang Yuxin Chemical Industry Co., Limited, which stated that in an effort to improve the safety and

environmental protection management level of chemical enterprises, the plants are requested to immediately stop production and perform

rectification and improvements in accordance with the country’s new safety, environmental protection requirements.

our facilities located in Yangkou Town were closed on September 1, 2017, to allow for rectification.

Subsequently, the Safety Supervision

and Administration Department and the Environmental Protection Departments of the local government conducted inspections of every bromine

production enterprise within its jurisdiction including our facilities, in order to improve security, environmental protections, pollution,

On September 21, 2018, the Company

received a closing notice from the People’s Government of Yangkou Town, Shouguang City informing it to close its three bromine

factories (Number 3, Number 4, and Number 11.) and not allowed to resume production.

The crude salt fields surrounding these factories

have been reclaimed as cultivated or construction land and hence did not meet the requirement for bromine and crude salt co-production

set by the relevant authority.

In closing these factories, the Company wrote off net book value of these factories’ property, plant

and equipment in the amount of $18,644,473 in the loss on demolition of the factory in the consolidated statements of loss for the fiscal

year ended December 31, 2018, recorded an impairment loss on the related mineral rights of these three factories of $1,284,832 included

in the impairment of property, plant and equipment in the consolidated statements of loss for the fiscal year ended December 31, 2018

and wrote off $52,926 of prepaid land lease recorded in other operating loss in the consolidated statements of loss for fiscal year ended

December 31, 2018.

The Company incurred dismantling fee in the amount of $273,757 recorded in other operating loss in the consolidated

statements of loss for fiscal year ended December 31, 2018.

The Company negotiated with the local villages over compensation for the

payment already made for these land leases and mineral rights in the past.

This part of the cost has been used as the resumption of land

use, so the village committee will not be compensated.

In February 2019, the Company

received a notification from the local government of Yangkou County that its Factory No.

9 passed inspection and

could resume operations.

authorities, such as, CSRC, MOF, PRC National Administration of State Secrets Protection, and National Archives Administration of China

will regulate, supervise and inspect pursuant to their respective statutory mandates over matters of Confidentiality and Archives Administration

concerning overseas offering and listing by domestic companies.

As Confidentiality and Archives Administration is newly promulgated,

there is substantial uncertainty regarding their specific requirements.

If we fail to comply with related laws and regulations, we may

be subject to fine, confiscation, blocking transmission or criminal offense.

We have taken measures to adopt management systems for the

compliance of Confidentiality and Archives Provisions.

We believe our listing does not involve in national secrets, work secrets of governmental

agencies and undermine national and public interests.

There is no assurance that we will be able to meet all applicable regulatory requirements

and guidelines, or comply with all applicable regulations at all times, or that we will not be subject to fines or other penalties in

the future as a result of regulatory inspections.

Transfers and Dividend Distribution

corporate structure is a direct holding structure, that is, the overseas entity listed in the U.S., Gulf Resources, Inc., a Nevada corporation

(“Gulf Resources”), controls SCHC (the “WFOE”) and DCHC through the Hong Kong company, Hong Kong Jiaxing Industrial

Limited, or Hong Kong Jiaxing.

our direct holding structure, the cross-border transfer of funds within our corporate group is legal and compliant with the laws and

regulations of the PRC.

Foreign investors’ funds can be directly transferred to Hong Kong Jiaxing, and then transferred to subordinate

operating entities through SCHC, or the WFOE.

the Company intends to distribute dividends, the Company will transfer the dividends to Hong Kong Jiaxing in accordance with the laws

and regulations of the PRC, and then Hong Kong Jiaxing will transfer the dividends to Gulf Resources, and the dividends will be distributed

from Gulf Resources to all shareholders respectively in proportion to the shares they hold, regardless of whether the shareholders are

investors or investors in other countries or regions.

the reporting periods presented in this annual report, no cash and other asset transfers have occurred among the Company and its subsidiaries;

and no dividends or distributions of a subsidiary has been made to the Company or to the shareholders of the Company.

For the foreseeable

future, the Company does not expect to pay any cash dividends.

PRC subsidiaries’ ability to distribute dividends is based upon their distributable earnings.

Current PRC regulations permit our

PRC subsidiaries to pay dividends to their respective shareholders only out of their accumulated profits, if any, determined in accordance

with PRC accounting standards and regulations.

In addition, each of our PRC subsidiaries is required to set aside at least 10% of its

after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of each of their registered capitals.

These reserves are not distributable as cash dividends.

address persistent capital outflows and the RMB’s depreciation against the U.S.

dollar in the fourth quarter of 2016, the People’s

Bank of China and the State Administration of Foreign Exchange, or SAFE, have implemented a series of capital control measures in the

subsequent months, including stricter vetting procedures for China-based companies to remit foreign currency for overseas acquisitions,

dividend payments and shareholder loan repayments.

The PRC government may continue to strengthen its capital controls and our PRC subsidiaries’

dividends and other distributions may be subject to tightened scrutiny in the future.

The PRC government also imposes controls on the

conversion of RMB into foreign currencies and the remittance of currencies out of the PRC.

Therefore, we may experience difficulties

in completing the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends from our profits,

Furthermore, if our subsidiaries in the PRC incur debt on their own in the future, the instruments governing the debt may restrict

their ability to pay dividends or make other payments.

addition, the Enterprise Income Tax Law and its implementation rules provide that a withholding tax at a rate of 10% will be applicable

to dividends payable by Chinese companies to non-PRC-resident enterprises unless reduced under treaties or arrangements between the PRC

central government and the governments of other countries or regions where the non-PRC resident enterprises are tax resident.

to the tax agreement between Mainland China and the Hong Kong Special Administrative Region, the withholding tax rate in respect to the

payment of dividends by a PRC enterprise to a Hong Kong enterprise may be reduced to 5% from a standard rate of 10%.

However, if the

relevant tax authorities determine that our transactions or arrangements are for the primary purpose of enjoying a favorable tax treatment,

the relevant tax authorities may adjust the favorable withholding tax in the future.

Accordingly, there is no assurance that the reduced

5% withholding rate will apply to dividends received by our Hong Kong subsidiary from our PRC subsidiaries.

This withholding tax will

reduce the amount of dividends we may receive from our PRC subsidiaries.

see “Item 1A.

Risk Factors— Risks Related to Doing Business in China—We may rely on dividends and other distributions

on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of

our PRC subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business.” and

“— PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control

of currency conversion may delay us from making loans or additional capital contributions to our PRC subsidiaries, which could materially

and adversely affect our liquidity and our ability to fund and expand our business.”

Foreign Company Accountable Act

common stock may be delisted from the Nasdaq under the Holding Foreign Companies Accountable Act (“HFCAA”), if the PCAOB

is unable to adequately inspect audit documentation located in China, or investigate our auditor.

Furthermore, on June 22, 2021, the

Senate passed the Accelerating Holding Foreign Companies Accountable Act, which was signed into law, and amends the HFCAA and requires

the SEC to prohibit an issuer’s securities from trading on any U.S.

stock exchanges if its auditor is not subject to PCAOB inspections

for two consecutive years instead of three.

Our auditor, GGF CPA LTD., Certified Public Accountants, is a China-based accounting firm

registered with the PCAOB, and is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess

its compliance with the applicable professional standards.

Our auditor is headquartered in the China and is subject to inspection by

the PCAOB on a regular basis.

On August 26, 2022, the PCAOB signed the Protocol with the CSRC and the MOF of the People’s Republic

of China, governing inspections and investigations of audit firms based in mainland China and Hong Kong.

The Protocol remains unpublished

and is subject to further explanation and implementation.

Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC,

the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and the unfettered ability to

transfer information to the SEC.

On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and

removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered

public accounting firms.

On December 29, 2022, legislation entitled “Consolidated Appropriations Act, 2023” (the “Consolidated

Appropriations Act”), was signed into law by President Joseph Biden of the United States.

The Consolidated Appropriations Act contained,

among other things, an identical provision to Accelerating Holding Foreign Companies Accountable Act, which reduces the number of consecutive

non-inspection years required for triggering the prohibitions under the HFCAA from three years to two.

Each year, the PCAOB will determine

whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions.

We cannot assure

you that we will not be identified by the SEC under the HFCAA as an issuer that has retained an auditor that has a branch or office located

in a foreign jurisdiction that the PCAOB determines it is unable to inspect or investigate completely because of a position taken by

an authority in that foreign jurisdiction.

In addition, there can be no assurance that, if we have a “non-inspection” year,

we will be able to take any remedial measures.

If we were so identified for two consecutive years, trading in our common stock could

in the future be prohibited under the HFCAA and, as a result, we cannot assure you that we will be able to maintain the listing of our

securities on the Nasdaq Stock Market or that you will be allowed to trade our common stock in the United States on the “over-the-counter”

markets or otherwise.

Should our common stock become not listed or tradeable in the United States, the value of our common stock could

be materially affected.

See “ Risk Factors - Our common stock may be delisted from the Nasdaq under the Holding Foreign Companies

Accountable Act if the PCAOB is unable to adequately inspect audit documentation located in China.

The delisting of our common stock,

or the threat of their being delisted, may materially and adversely affect the value of your investment .”

and rectification process of our Bromine, Crude Salt and Chemical Products factories

September 1, 2017, the Company received letters from the People’s Government of Yangkou Town, Shouguang City to each of its subsidiaries,

Shouguang City Haoyuan Chemical Company Limited and Shouguang Yuxin Chemical Industry Co., Limited, which stated that in an effort to

improve the safety and environmental protection management level of chemical enterprises, the plants are requested to immediately stop

production and perform rectification and improvements in accordance with the country’s new safety, environmental protection requirements.

As a result, our facilities located in Yangkou Town were closed on September 1, 2017 to allow for rectification.

Subsequently,

the Safety Supervision and Administration Department and the Environmental Protection Departments of the local government conducted inspections

of every bromine production enterprise within its jurisdiction including our facilities, in order to improve security, environmental

protections, pollution, and safety.

September 21, 2018, the Company received a closing notice from the People’s Government of Yangkou Town, Shouguang City informing

it to close its three bromine factories (Number 3, Number 4, and Number 11.) and not allowed to resume production.

The crude salt fields

surrounding these factories have been reclaimed as cultivated or construction land and hence did not meet the requirement for bromine

and crude salt co-production set by the relevant authority.

In closing these factories, the Company wrote off net book value of these

factories’ property, plant and equipment in the amount of $18,644,473 in the loss on demolition of the factory in the consolidated

statements of loss for the fiscal year ended December 31, 2018, recorded an impairment loss on the related mineral rights of these three

factories of $1,284,832 included in the impairment of property, plant and equipment in the consolidated statements of loss for the fiscal

year ended December 31, 2018 and wrote off $52,926 of prepaid land lease recorded in other operating loss in the consolidated statements

of loss for fiscal year ended December 31, 2018.

The Company incurred dismantling fee in the amount of $273,757 recorded in other operating

loss in the consolidated statements of loss for fiscal year ended December 31, 2018.

The Company negotiated with the local villages over

compensation for the payment already made for these land leases and mineral rights in the past.

This part of the cost has been used as

the resumption of land use, so the village committee will not be compensated.

February 2019, the Company received a notification from the local government of Yangkou County that its Factory No.

9 passed inspection and could resume operations.

In April 2019, Factory No.1 and Factory No.7 resumed operation.

On November 25, 2019, the

government of Shouguang City issued a notice ordering all bromine facilities in Shouguang City, including the Company’s

bromine facilities, including Factory No.

November 25, 2019, the government of Shouguang City issued a notice ordering all bromine facilities in Shouguang City, including the

Company’s bromine facilities, including Factory No.

1 and Factory No.

7, to temporarily stop production from December 16, 2019, to February

Subsequently, due to the coronavirus outbreak in China, the local government ordered those bromine facilities to postpone

the commencement of production.

Subsequently, the Company received approval dated February 27, 2020, issued by the local

governmental authority allowing the Company to resume production after the winter temporary closure.

Further, the Company received

another approval from the Shouguang Yangkou People’s Government dated March 5, 2020, allowing the Company to resume production

at its bromine factories No.

7, to temporarily stop production from December 16, 2019

to February 10, 2020.

Subsequently, due to the coronavirus outbreak in China, the local government ordered those bromine facilities to

postpone the commencement of production.

Subsequently, the Company received an approval dated February 27, 2020 issued by the local governmental

authority allowing the Company to resume production after the winter temporary closure.

Further, the Company received another approval

from the Shouguang Yangkou People’s Government dated March 5, 2020 allowing the Company to resume production at its bromine factories

4, No.7 and No.

9 in order to meet the needs of bromide products for epidemic prevention and

control (the “March 2020 Approval”).

9 in order to meet the needs of bromide products for epidemic prevention and control (the “March 2020

The Company’s Factories No.

7 commenced trial production in

mid-March 2020 and commercial production on April 3, 2020, and its Factories No.

7 commenced trial production in mid- March 2020 and commercial production

on April 3, 2020 and its Factories No.

9 commenced commercial production on May 6, 2020.

The Company received verbal notification from the government regarding Factory No.

8, allowing it to recommence production

in August 2022.

8 began contributing revenue in the fourth quarter of 2022.

Pursuant to a notification from

the government of Shouguang City, all bromine facilities in Shouguang City were temporarily closed from December 15, 2024, until February

In compliance with the notification, the Company ceased production at its bromine facilities during this period and resumed

operations at the bromine and crude salt factories as scheduled in February 2025.

Because many smaller producers

have not had the capital to conduct the rectification required by the government, management believes there could be some extremely attractive

acquisition opportunities in bromine.

However, at the present time, all of management’s attention is focused on getting its facilities

approved and in full production.

Management may consider acquisition opportunities in this segment in the future if the prices were sufficiently

We secured the land for our

upcoming chemical factory and obtained the final approval regarding environmental protection assessment.

Construction of the new

chemical facilities located at Bohai Marine Fine Chemical Industrial Park, commenced in June 2020.

Initially, the construction was

projected to last around one year, with an additional six months for equipment installation and testing, However, due to the COVID

The Company received verbal notification

from the government regarding Factory No.

8, allowing it to recommence production in August 2022.

8 began contributing revenue

in the fourth quarter 2022.

to a notification from the government of Shouguang City, all bromine facilities in Shouguang City were temporarily closed from December

26, 2025 until February 24, 2026.

In compliance with the notification, the Company ceased production at its bromine facilities during

this period and resumed operations at the bromine and crude salt factories as scheduled in February 2026.

many smaller producers have not had the capital to conduct the rectification required by the government, management believes there could

be some extremely attractive acquisition opportunities in bromine.

However, at the present time, all of management’s attention

is focused on getting its facilities approved and in full production.

Management may consider acquisition opportunities in this segment

in the future if the prices were sufficiently attractive.

secured the land for our upcoming chemical factory and obtained the final approval regarding environmental protection assessment.

of the new chemical facilities located at Bohai Marine Fine Chemical Industrial Park, commenced in June 2020.

Initially, the construction

was projected to last around one year, with an additional six months for equipment installation and testing, However, due to the COVID

epidemic and electrical restrictions, the opening of the chemical factory has been postponed.

The Company has received refrigeration

The Company has received the refrigeration

and air compressor units.

The estimated total cost for the relocation process is approximately $69 million.

As of December 31, 2024,

and 2023, the Company incurred relocation costs in the amount of $45,584,344 and $45,584,344, respectively.

Additionally, the

procurement of the final equipment for our chemical factory has been postponed until we have a better understanding of the potential

for derivative bromine products.

As of December 31, 2025 and

2024, the Company incurred relocation costs in the amount of $45,584,344 and $45,584,344, respectively.

Additionally, the procurement

of the final equipment for our chemical factory has been postponed until we have a better understanding of the potential for derivative

bromine products.

We anticipate proceeding with the completion of its chemical factory in due course.

However, in the

event that the Chinese economy persists in its weakness and if we perceive this trend to be ongoing, there is a possibility that the

chemical factory could be repurposed for the production of Sodium- Ion batteries.

In January 2017, the Company

completed the construction of the first brine water and natural gas well field in Daying County, Sichuan Province, and commenced trial

production in January 2019.

On May 29, 2019, the Company received verbal notice from the government of Tianbao Town, Daying County, Sichuan

Province, mandating the need for project approval for its Daying well, encompassing the entire natural gas and brine water project.

also includes approvals for safety production inspection, environmental protection assessment, and to solve the related land issue.

these approvals are obtained, the Company must temporarily suspend trial production at its natural gas well in Daying.

Additionally, in

compliance with the Chinese government new policies, the Company is required to obtain an exploration license for bromine and a mining

license for natural gas.

Pursuant to the Opinions of the Ministry of Natural Resources on Several Issues in Promoting the Reform of Mineral

Resources Management (Trial) promulgated by the Ministry of Natural Resources of PRC on January 9, 2020, which came into effect on May

1, 2020, privately owned enterprises are allowed to participate in natural gas production.

The Company is engaged in ongoing discussions

with the government of Daying County regarding the establishment of a joint venture for the exploration and production of natural gas

and brine products in Sichuan.

We are not writing off any of

the goodwill related to our chemicals business.

We believe the upcoming chemical factory could produce sales and profits.

We believe there

may be much less capacity in the chemical industry, as many factories may be permanently closed.

In addition, other competitor factories

may reduce their production capacity.

However, in the event that the

Chinese economy persists in its weakness and if we perceive this trend to be ongoing, there is a possibility that the chemical factory

could be repurposed for the production of Sodium-Ion batteries.

January 2017, the Company completed the construction of the first brine water and natural gas well field in Daying County, Sichuan Province,

and commenced trial production in January 2019.

On May 29, 2019, the Company received verbal notice from the government of Tianbao Town,

Daying County, Sichuan Province, mandating the need for project approval for its Daying well, encompassing the entire natural gas and

brine water project.

This also includes approvals for safety production inspection, environmental protection assessment, and to solve

the related land issue.

Until these approvals are obtained, the Company must temporarily suspend trial production at its natural gas

well in Daying.

Additionally, in compliance with the Chinese government new policies, the Company is required to obtain an exploration

license for bromine and a mining license for natural gas.

Pursuant to the Opinions of the Ministry of Natural Resources on Several Issues

in Promoting the Reform of Mineral Resources Management (Trial) promulgated by the Ministry of Natural Resources of PRC on January 9,

2020, which came into effect on May 1, 2020, privately owned enterprises are allowed to participate in natural gas production.

is engaged in ongoing discussions with the government of Daying County regarding the establishment of a joint venture for the exploration

and production of natural gas and brine products in Sichuan.

are not writing off any of the goodwill related to our chemicals business.

We believe the upcoming chemical factory could produce sales

We believe there may be much less capacity in the chemical industry, as many factories may be permanently closed.

other competitor factories may reduce their production capacity.

We expect to have a factory that operates efficiently.

Considering the above factors and our strength

with better equipment, we expect to generate sales and earnings in this segment at a level well above previous periods.

We will continue to control the

land and buildings where the old chemical factories are located.

At this time, we have not considered how or if we can monetize those

In April 2022, our subsidiary,

Shouguang Hengde Salt Industry Co.

Ltd, was incorporated in Shandong Province, China, specifically for crude salt production and trading.

This subsidiary was established in response to a new government policy mandating separate registrations for bromine and crude salt companies.

As of the date of this annual report,

the Company is awaiting governmental approval for Factories No.

Our Business Segments

Our business operations are conducted in four segments,

bromine, crude salt, chemical products, and natural gas.

We manufacture and trade bromine, crude salt and natural gas, and manufacture

and sell chemical products used in oil and gas field explorations and papermaking chemical agents, and materials for human and animal

Considering the

above factors and our strength with better equipment, we expect to generate sales and earnings in this segment at a level well above

previous periods.

will continue to control the land and buildings where the old chemical factories are located.

At this time, we have not considered how

or if we can monetize those assets.

April 2022, our subsidiary, Shouguang Hengde Salt Industry Co.

Ltd, was incorporated in Shandong Province, China, specifically for crude

salt production and trading.

This subsidiary was established in response to a new government policy mandating separate registrations

for bromine and crude salt companies.

of the date of this annual report, the Company is awaiting governmental approval for Factories No.

Business Segments

business operations are conducted in four segments, bromine, crude salt, chemical products, and natural gas.

We manufacture and trade

bromine, crude salt and natural gas, and manufacture and sell chemical products used in oil and gas field explorations and papermaking

chemical agents, and materials for human and animal antibiotics.

We conduct all of our operations in China.

Bromine and Crude Salt

We manufacture and distribute

bromines through our wholly-owned subsidiary, Shouguang City Haoyuan Chemical Company Limited, or SCHC.

Bromine is a halogen element.

is a red volatile liquid at standard room temperature which has reactivity between chlorine and iodine.

Elemental bromine is used to manufacture

a wide variety of bromine compounds used in industry and agriculture.

Bromine is also used to form intermediates in organic synthesis,

which is somewhat preferable over iodine due to its lower cost.

Bromine is commonly used in brominated flame retardants, fumigants, water

purification compounds, dyes, medicines and disinfectants.

The extraction of bromine in the

Shandong Province is limited by the provincial government to licensed operations.

and Crude Salt

manufacture and distribute bromines through our wholly-owned subsidiary, Shouguang City Haoyuan Chemical Company Limited, or SCHC.

is a halogen element.

It is a red volatile liquid at standard room temperature which has reactivity between chlorine and iodine.

bromine is used to manufacture a wide variety of bromine compounds used in industry and agriculture.

Bromine is also used to form intermediates

in organic synthesis, which is somewhat preferable over iodine due to its lower cost.

Bromine is commonly used in brominated flame retardants,

fumigants, water purification compounds, dyes, medicines and disinfectants.

extraction of bromine in the Shandong Province is limited by the provincial government to licensed operations.

We hold one such license.

As part of our business strategy,

it is our plan to continue acquiring smaller scaled and unlicensed producers and to use our bromine to expand our downstream chemical

Location of Production Sites

Our production sites are located

in the Shandong Province in northeastern China.

The productive formation (otherwise referred to as the “working region”),

extends from latitude N 36°56’ to N 37°20’ and from longitude E 118°38’ to E 119°14’, in the north

region of Shouguang city, from the Xiaoqing River of Shouguang city to the west of the Dan River, bordering on Hanting District in the

east, from the main channel of “Leading the Yellow River to Supply Qingdao City Project” in the south to the coastline in

The territory is classified as coastal alluvial – marine plain with an average height two to seven meters above the sea

As part of our business strategy, it is our plan to continue acquiring smaller scaled and unlicensed producers and to use our bromine

to expand our downstream chemical operations.

Required from the PRC Authorities for Our Operations

operations in China are governed by PRC laws and regulations.

We engage in the manufacturing and trading of bromine through our wholly-owned

subsidiary, Shouguang City Haoyuan Chemical Company Limited (“SCHC”), which holds the necessary licenses for bromine and

crude salt mining and production.

Shouguang Hengde Salt Industry Co.

Ltd (“SHSI”) is responsible for trading crude salt.

No operational license is required for such business activity.

Currently, operations at Shouguang Yuxin Chemical Industry Company Limited

(“SYCI”) are suspended due to relocation and construction, which we have obtained the required construction permit.

explore and develop natural gas and brine resources (including bromine and crude salt) within the PRC in Sichuan Province, the Company

established Daying County Haoyuan Chemical Company Limited (“DCHC”).

DCHC is currently in discussions with government authorities

regarding permits for mining natural gas and halogen water.

of the date of this annual report, we and our PRC subsidiaries have obtained all requisite licenses and permits from the PRC government

authorities needed for the business

of our PRC subsidiaries in China, and no permission or approval has been denied.Given the uncertainties of interpretation and implementation

of relevant laws and regulations and the enforcement practice by relevant government authorities, we may be required to obtain additional

licenses, permits, filings or approvals for the functions and services of our platform in the future.

in connection with our issuance of securities to foreign investors, under current PRC laws, regulations and regulatory rules, as of the

date of this annual report, we, and our PRC subsidiaries, (i) are not required to obtain permissions from the China Securities Regulatory

Commission, or the CSRC, (ii) are not required to go through cybersecurity review by the Cyberspace Administration of China, or the CAC,

and (iii) have not been asked to obtain such permissions by any PRC authority.

the PRC government has recently indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or

foreign investment in China-based issuers.

If we fail to receive or maintain the required permissions or approvals, we may be forced

to suspend or cease operations, lending to loss in revenue.

Authorities may impose fines, sanctions, or initiate legal proceedings, negative

publicity would affect our Company’s image.

Investors may react negatively, causing share price declines due to perceived regulatory

Because of the regulatory uncertainty, which can potentially lead to valuation adjustments and increased risk premiums.

plans may need to be suspended or scaled back if approvals or permits become harder to obtain.

of Production Sites

production sites are located in the Shandong Province in northeastern China.

The productive formation (otherwise referred to as the “working

region”), extends from latitude N 36°56’ to N 37°20’ and from longitude E 118°38’ to E 119°14’,

in the north region of Shouguang city, from the Xiaoqing River of Shouguang city to the west of the Dan River, bordering on Hanting District

in the east, from the main channel of “Leading the Yellow River to Supply Qingdao City Project” in the south to the coastline

in the north.

The territory is classified as coastal alluvial – marine plain with an average height two to seven meters above the

The terrain is relatively flat.

Geological background of this region

The Shandong Province working

region is located to the east of Lubei Plain and on the south bank of Bohai Laizhou Bay.

The geotectonic location bestrides on the North

China Platte (I) and north three-level structure units, from west to east including individually the North China Depression, Luxi Plate,

and Jiaobei Plate.

Meanwhile, 4 V-level structure units including the Dongying Sag of Dongying Depression (IV) of North China Depression,

the Buried Lifting Area of Guangrao, Niutou sag and Buried Lifting Area of Shuanghe and are all on two V-level structure units including

Xiaying Buried Lifting Area of Weifang Depression (IV) of Luxi Plate and Chuangyi Sag, as well as on a V-level structure units of Jiaobei

Buried Lifting Area of Jiaobei Plate.

Processing of Bromine

Natural brine is a complicated

salt-water system, containing many ionic compositions in which different ions have close interdependent relationships, and which can be

reunited to form many dissolved soluble salts such as sodium chloride, potassium chloride, calcium sulfate, potassium sulfate and other

similar soluble salts.

The goal of natural brine processing is to separate and precipitate the soluble salts or ions away from the water.

Due to the differences in the physical and chemical characteristics of brine samples, the processing methods are varied and can result

in inconsistency of processing and varied technical performance for the different useful components from the natural brine.

Bromine is the first component

extracted during the processing of natural brine.

In natural brine, the bromine exists in the form of bromine sodium and bromine magnesium

and other soluble salts.

The bromine production process is as follows:

natural brine is pumped from underground through extraction wells by subaqueous pumps;

the natural brine then passes through transmission pipelines to storage reservoirs;

the natural brine is sent to the bromine refining plant where bromine is extracted

from the natural brine.

In neutral or acidic water, the bromine ion is easily oxidized by adding the oxidative of chlorine, which generates

the single bromine away from the brine.

Thereafter the extracted single bromine is blown out by forced air, then absorbed by sulfur dioxide

or soda by adding acid, chlorine and sulfur.

background of this region

Shandong Province working region is located to the east of Lubei Plain and on the south bank of Bohai Laizhou Bay.

The geotectonic location

bestrides on the North China Platte (I) and north three-level structure units, from west to east including individually the North China

Depression, Luxi Plate, and Jiaobei Plate.

Meanwhile, 4 V-level structure units including the Dongying Sag of Dongying Depression (IV)

of North China Depression, the Buried Lifting Area of Guangrao, Niutou sag and Buried Lifting Area of Shuanghe and are all on two V-level

structure units including Xiaying Buried Lifting Area of Weifang Depression (IV) of Luxi Plate and Chuangyi Sag, as well as on a V-level

structure units of Jiaobei Buried Lifting Area of Jiaobei Plate.

brine is a complicated salt-water system, containing many ionic compositions in which different ions have close interdependent relationships

and which can be reunited to form many dissolved soluble salts such as sodium chloride, potassium chloride, calcium sulfate, potassium

sulfate and other similar soluble salts.

The goal of natural brine processing is to separate and precipitate the soluble salts or ions

away from the water.

Due to the differences in the physical and chemical characteristics of brine samples, the processing methods are

varied, and can result in inconsistency of processing and varied technical performance for the different useful components from the natural

is the first component extracted during the processing of natural brine.

In natural brine, the bromine exists in the form of bromine

sodium and bromine magnesium and other soluble salts.

bromine production process is as follows:

brine is pumped from underground through extraction wells by subaqueous pumps;

natural brine then passes through transmission pipelines to storage reservoirs;

natural brine is sent to the bromine refining plant where bromine is extracted from the natural

In neutral or acidic water, the bromine ion is easily oxidized by adding the oxidative

of chlorine, which generates the single bromine away from the brine.

Thereafter the extracted

single bromine is blown out by forced air, then absorbed by sulfur dioxide or soda by adding

acid, chlorine and sulfur.

Extracted bromine is stored in containers of different sizes;

the wastewater from this refining process is then transported by pipeline to brine pans.

Our production feeds include (i) natural brine;

wastewater from this refining process is then transported by pipeline to brine pans.

production feeds include (i) natural brine;

(ii) vitriol;

1 unchanged sentence

and (v) coal.

We also produce crude salt, which

is produced from the evaporation of the wastewater after our bromine production process.

Once the brine is returned to the surface and

the bromine is removed, the remaining brine is pumped to on-site containing pools and then exposed to natural sunshine.

This causes the

water to evaporate from the brine, resulting in salt being left over afterwards.

Crude salt is the principal material in alkali production

as well as chlorine alkali production and is widely used in the chemical, food and beverage, and other industries.

Chemical Products

We produce chemical products through

our wholly-owned subsidiary, Shouguang Yuxin Chemical Industry Company Limited, or SYCI.

At the present time, SYCI is closed pursuant

to the letter from government dated November 24, 2017.

It is being relocated to Bohai Marine Fine Chemical Industry Park, Shouguang

SYCI paid $8,846,282 for a 50-year lease of a piece of land for its new factories at Bohai Marine Fine Chemical Industrial Park

in December 2017 and leased another piece of land from the third party for its new chemical factory.

We received the final approval for

our new chemical factory and started construction in June 2020.

Historically, SYCI concentrated

its efforts on the production and sale of chemical products that are used in oil and gas field exploration, oil and gas distribution,

oil field drilling, papermaking chemical agents, inorganic chemicals and materials that are used for human and animal antibiotics.

engaged in depth study of existing products and new product research and development at the same time.

SYCI’s annual production

of oil and gas field exploration products and related chemicals was over 26,000 tons, and its production of papermaking-related chemical

products was over 5,000 tons.

SYCI’s annual production capacity of materials that are used for human and animal antibiotics was

over 6,800 tons.

Sales and Marketing

We have an in-house sales staff

also produce crude salt, which is produced from the evaporation of the wastewater after our bromine production process.

Once the brine

is returned to the surface and the bromine is removed, the remaining brine is pumped to on-site containing pools and then exposed to

natural sunshine.

This causes the water to evaporate from the brine, resulting in salt being left over afterwards.

Crude salt is the

principal material in alkali production as well as chlorine alkali production and is widely used in the chemical, food and beverage,

and other industries.

produce chemical products through our wholly-owned subsidiary, Shouguang Yuxin Chemical Industry Company Limited, or SYCI.

At the present

time, SYCI is closed pursuant to the letter from government dated November 24, 2017.

It is being relocated to Bohai Marine Fine Chemical

Industry Park, Shouguang City.

SYCI paid $9,047,232 for a 50-year lease of a piece of land for its new factories at Bohai Marine Fine

Chemical Industrial Park in December 2017 and leased another piece of land from the third party for its new chemical factory.

the final approval for our new chemical factory and started construction in June 2020.

Historically,

SYCI concentrated its efforts on the production and sale of chemical products that are used in oil and gas field exploration, oil and

gas distribution, oil field drilling, papermaking chemical agents, inorganic chemicals and materials that are used for human and animal

SYCI engaged in depth study of existing products and new product research and development at the same time.

annual production of oil and gas field exploration products and related chemicals was over 26,000 tons, and its production of papermaking-related

chemical products was over 5,000 tons.

SYCI’s annual production capacity of materials that are used for human and animal antibiotics

was over 6,800 tons.

and Marketing

have an in-house sales staff of 7 people.

Our customers send their orders to us first.

Our in-house sales staff then attempts to satisfy these orders based on our

actual production schedules and inventories on hand.

Many of our customers have a long-term relationship with us.

We expect this to continue

due to stable demand for mineral products, however, these relationships cannot be guaranteed in the future.

Principal Customers

We sell a substantial portion

of our products to a limited number of PRC customers.

Our principal customers during 2024 were Shandong Morui Chemical Company Limited,

Shandong Brother Technology Limited, and Shouguang Weidong Chemical Company Limited.

We have ongoing policies in place to ensure that

sales are made to customers who are credit-worthy.

During the year ended December

31, 2024, sales to our three largest bromine customers, based on net revenue from such customers, aggregated $1,969,624 or

approximately 35% of total net revenue from sale of bromine;

Our in-house sales staff then attempts to satisfy

these orders based on our actual production schedules and inventories on hand.

Many of our customers have a long-term relationship with

We expect this to continue due to stable demand for mineral products, however, these relationships cannot be guaranteed in the future.

sell a substantial portion of our products to a limited number of PRC customers.

Our principal customers during 2025 were Shandong Morui

Chemical Company Limited, Shandong Shouguang God Runfa Ocean Chemical Co., Ltd, Shandong Brother Technology Limited, and Shouguang Weidong

Chemical Company Limited.

We have ongoing policies in place to ensure that sales are made to customers who are credit-worthy.

the year ended December 31, 2025, sales to our three largest bromine customers, based on net revenue from such customers, aggregated

$9,971,820 or approximately 43% of total net revenue from sale of bromine;

and sales to our largest customer represented approximately

15%, respectively, of total net revenue from the sale of bromine.

During the year ended December

31, 2023, sales to our three largest bromine customers, based on net revenue from such customers, aggregated $10,866,228 or approximately

40% of total net revenue from sale of bromine;

and sales to our largest customer represented approximately 14%, respectively, of total

net revenue from the sale of bromine.

the year ended December 31, 2024, sales to our three largest bromine customers, based on net revenue from such customers, aggregated

$1,969,624 or approximately 35% of total net revenue from sale of bromine;

and sales to our largest customer represented approximately

12%, respectively, of total net revenue from the sale of bromine.

each of the years ended December 31, 2025, and 2024, sales to our three largest crude salt customers, based on net revenue from such

customers, aggregated $2,418,032 and $2,049,988, respectively, or approximately 100% and 100% of total net revenue from sale of crude

and sales to our largest customer represented approximately 40% and 38%, respectively, of total net revenue from the sale of crude

each of the years ended December 31, 2025, and 2024, the net revenue for the chemical products was $0.

During each of the years ended

December 31, 2024, and 2023, sales to our three largest crude salt customers, based on net revenue from such customers, aggregated $2,049,988

and $2,971,467, respectively, or approximately 100% and 100% of total net revenue from sale of crude salt;

and sales to our largest customer

represented approximately 38% and 38%, respectively, of total net revenue from the sale of crude salt.

During each of the years ended December 31, 2024, and

2023, the net revenue for the chemical products was $0.

During each of the years ended December

31, 2024, and 2023, the net revenue for the natural gas was $61,207 and $150,861.

Principal Suppliers

Our principal external suppliers

are Laizhou Shengfu Chemical Company Limited, Weifang Wanhong Chemical Company Limited, Shandong Xinlong International Trade Company Limited,

Shouguang Runfeng trading Company Limited.

During the year ended December

31, 2024, and 2023, we purchased 100% of raw materials for our bromine and crude production from our top four suppliers.

During the year ended December

31, 2024, and 2023, we did not purchase any raw materials for chemical products production.

This supplier’s concentration makes us vulnerable

to a near-term adverse impact, should the relationships be terminated.

Business Strategy

Expansion of Production Capacity to Meet Demand

December 31, 2025, and 2024, the net revenue for natural gas was $0 and $61,207.

principal external suppliers are Laizhou Shengfu Chemical Company Limited, Weifang Wanhong Chemical Company Limited, Shandong Xinlong

International Trade Company Limited, Shouguang Runfeng trading Company Limited.

the year ended December 31, 2025, and 2024, we purchased 100% of raw materials for our bromine and crude production from our top four

the year ended December 31, 2025, and 2024, we did not purchase any raw materials for chemical products production.

This supplier’s

concentration makes us vulnerable to a near-term adverse impact, should the relationships be terminated.

of Production Capacity to Meet Demand

Bromine and Crude Salt

In view of keen competition and

the trend of less bromine contraction of brine water being extracted in Shouguang City, Shandong Province, the Company intended to access

more bromine and crude salt resources by finding new underground brine water resources in the Sichuan Province.

On January 30, 2015, we

announced that we had found natural gas resources under our bromine well in Sichuan Province.

On November 23, 2015, the Company’s

subsidiary SCHC entered into an agreement with the People’s Government of Daying County in Sichuan Province for the exploration

and development of natural gas and brine resources (including bromine and crude salt).

In January 2017, the Company completed the construction

of the first brine water and natural gas well field in Sichuan Province.

Subsequently, the Company found some issues related to water

and other potential impurities in natural gas during trial production.

In resolving the problem, the Company purchased customized

equipment for its natural gas project.

The installation of such equipment, including providing piping and electricity, was completed in

The Company completed the test production at its first natural gas well in Sichuan Province and commenced trial production

view of keen competition and the trend of less bromine contraction of brine water being extracted in Shouguang City, Shandong Province,

the Company intended to access more bromine and crude salt resources by finding new underground brine water resources in the Sichuan

On January 30, 2015, we announced that we had found natural gas resources under our bromine well in Sichuan Province.

23, 2015, the Company’s subsidiary SCHC entered into an agreement with the People’s Government of Daying County in Sichuan

Province for the exploration and development of natural gas and brine resources (including bromine and crude salt).

In January 2017,

On May 29, 2019, the Company received

verbal notice from the government of Tianbao Town, Daying County, Sichuan Province, mandating the need for project approval for its Daying

well, encompassing the entire natural gas and brine water project.

This also includes approvals for safety production inspection, environmental

protection assessment, and to solve the related land issue.

Until these approvals are obtained, the Company must temporarily suspend trial

production at its natural gas well in Daying.

Additionally, in compliance with the Chinese government new policies, the Company is required

to obtain an exploration license for bromine and a mining license for natural gas.

Pursuant to the Opinions of the Ministry of Natural

Resources on Several Issues in Promoting the Reform of Mineral Resources Management (Trial) promulgated by the Ministry of Natural Resources

of PRC on January 9, 2020, which came into effect on May 1, 2020, privately owned enterprises are allowed to participate in natural

gas production.

The Company is engaged in ongoing discussions with the government of Daying County regarding the establishment of a joint

venture for the exploration and production of natural gas and brine products in Sichuan.

On September 1, 2017, the

Company received notification from the Government of Yangkou Town, Shouguang City of PRC that production at all its factories must

be halted immediately.

This was required for the Company to perform rectification and improvement in compliance with the new local

safety and environmental protection requirements.

The Company has worked closely

with the county authorities to develop rectification plans for its bromine and crude salt businesses, reaching an agreement on a plan

in October 2017.

During the fiscal year ended December 31, 2018, the Company incurred $16,243,677 in the rectification and improvements

of plant and equipment of the bromine and crude salt factories resulting in a cumulative amount of $34,182,329 incurred as of December

The Shouguang City Bromine Association, on behalf of all the bromine producers in Shouguang, initiated negotiations with the

local government agencies.

The local governmental agencies acknowledged the fact that their initial requirements for the bromine industry

did not include the project, the planning and land use rights approvals, which were later introduced by the provincial government as new

requirements.

The Company understood from the local government that local government was coordinating with various government agencies

to solve these three outstanding approval issues in a timely manner and that all impacted bromine plants are not allowed to commence production

prior to obtaining those approvals.

the Company completed the construction of the first brine water and natural gas well field in Sichuan Province.

Subsequently, the Company

found some issues related to water and other potential impurities in the natural gas during trial production.

In resolving the problem,

the Company purchased customized equipment for its natural gas project.

The installation of such equipment, including providing piping

and electricity, was completed in July 2018.

The Company completed the test production at its first natural gas well in Sichuan Province

and commenced trial production in January 2019.

May 29, 2019, the Company received verbal notice from the government of Tianbao Town, Daying County, Sichuan Province, mandating the

need for project approval for its Daying well, encompassing the entire natural gas and brine water project.

This also includes approvals

for safety production inspection, environmental protection assessment, and to solve the related land issue.

Until these approvals are

obtained, the Company must temporarily suspend trial production at its natural gas well in Daying.

Additionally, in compliance with the

Chinese government new policies, the Company is required to obtain an exploration license for bromine and a mining license for natural

Pursuant to the Opinions of the Ministry of Natural Resources on Several Issues in Promoting the Reform of Mineral Resources Management

(Trial) promulgated by the Ministry of Natural Resources of PRC on January 9, 2020, which came into effect on May 1, 2020, privately

owned enterprises are allowed to participate in natural gas production.

The Company is engaged in ongoing discussions with the government

of Daying County regarding the establishment of a joint venture for the exploration and production of natural gas and brine products

September 1, 2017, the Company received notification from the Government of Yangkou Town, Shouguang City of PRC that production at all

its factories must be halted immediately.

This was required for the Company to perform rectification and improvement in compliance with

the new local safety and environmental protection requirements.

Company has worked closely with the county authorities to develop rectification plans for its bromine and crude salt businesses, reaching

an agreement on a plan in October 2017.

During the fiscal year ended December 31, 2018, the Company incurred $16,243,677 in the rectification

and improvements of plant and equipment of the bromine and crude salt factories resulting in a cumulative amount of $34,182,329 incurred

as of December 31, 2018.

The Shouguang City Bromine Association, on behalf of all the bromine producers in Shouguang, initiated negotiations

with the local government agencies.

The local governmental agencies acknowledged the fact that their initial requirements for the bromine

industry did not include the project, the planning and land use rights approvals, which were later introduced by the provincial government

as new requirements.

The Company understood from the local government that local government was coordinating with various government

agencies to solve these three outstanding approval issues in a timely manner and that all impacted bromine plants are not allowed to

commence production prior to obtaining those approvals.

In April 2019, Factory No.1, Factory No.5 and Factory No.7 (Factory no.

5 is considered part of Factory

no.7 and both are managed as one factory since 2010) resumed operations upon receipt of verbal notification from local government of Yangkou

considered part of Factory no.7 and both are managed as one factory since 2010) resumed operations upon receipt of verbal notification

from local government of Yangkou County.

Then, on May 7, 2019, the Company renamed its Subdivision Factory No.

1 to Factory No.

and Factory No.

5 (previously integrated

with Factory No.

5 (previously integrated with Factory No.

7) as the new Factory No.

25, 2019, the government of Shouguang City issued a notice ordering all bromine facilities in Shouguang City, including the Company’s

all bromine facilities, including Factory No.1 and Factory No.

7, to temporarily stop production from December 16, 2019, to February 10,

Subsequently, due to the coronavirus outbreak in China, the local government ordered those bromine facilities to postpone the commencement

of production.

Subsequently, the Company received approval dated February 27, 2020, issued by the local governmental authority which

allows us to resume production after the winter temporary closure.

Further, the Company received another approval from the Shouguang Yangkou

People’s Government dated on March 5, 2020, to resume production at its bromine factories No.1, No.

4, No.7 and No.

9 in order to

meet the needs of bromide products for epidemic prevention and control (the “March 2020 Approval”).

The Company’s factories

No.7 and No.1 started trial production in middle March 2020, and commenced commercial production on April 3, 2020.

The Company received oral notification

from the government regarding Factory No.

November 25, 2019, the government of Shouguang City issued a notice ordering all bromine facilities in Shouguang City, including the

Company’s all bromine facilities, including Factory No.1 and Factory No.

7, to temporarily stop production from December 16, 2019,

to February 10, 2020.

Subsequently, due to the coronavirus outbreak in China, the local government ordered those bromine facilities to

postpone the commencement of production.

Subsequently, the Company received approval dated February 27, 2020, issued by the local governmental

authority which allows us to resume production after the winter temporary closure.

Further, the Company received another approval from

the Shouguang Yangkou People’s Government dated on March 5, 2020, to resume production at its bromine factories No.1, No.

9 in order to meet the needs of bromide products for epidemic prevention and control (the “March 2020 Approval”).

The Company’s factories No.7 and No.1 started trial production in middle March 2020, and commenced commercial production on April

Company received oral notification from the government regarding Factory No.

8, allowing it to resume production in August 2022.

Factory No.8 began contributing revenue

in the fourth quarter of 2022.

The Company is awaiting governmental

approval for Factories No.

To our knowledge, the government is finalizing plans for all mining areas, including flood prevention

As a result, we may be required to make certain modifications to our existing wells and aqueducts prior to commencement of operations

of these factories in order to satisfy the local government's requirements.

The Company completed its flood prevention project in December

No.8 began contributing revenue in the fourth quarter of 2022.

Company is awaiting governmental approval for Factories No.

To our knowledge, the government is finalizing plans for all

mining areas, including flood prevention measures.

As a result, we may be required to make certain modifications to our existing wells

and aqueducts prior to commencement of operations of these factories in order to satisfy the local government’s requirements.

Company completed its flood prevention project in December 2023.

This project was implemented for safeguarding its bromine facilities.

Pursuant to the notification from

the government of Shouguang City, all bromine facilities in Shouguang City were temporarily closed from December 15, 2024, until February

In compliance with the notification, the Company ceased production at its bromine facilities during this period and resumed

preparation operations at the bromine and crude salt factories as scheduled in February 2025.

to the notification from the government of Shouguang City, all bromine facilities in Shouguang City were temporarily closed from December

26, 2025, until February 24, 2026.

In compliance with the notification, the Company ceased production at its bromine facilities during

this period and resumed preparation operations at the bromine and crude salt factories as scheduled in February 2026.

Chemical Products

On November 24, 2017, the Company

received a letter from the Government of Yangkou County, Shouguang City notifying the Company to relocate its two chemical production

plants located in the second living area of the Qinghe Oil Extraction Plant to the Bohai Marine Fine Chemical Industrial Park (the “November

2017 Letter”).

November 24, 2017, the Company received a letter from the Government of Yangkou County, Shouguang City notifying the Company to relocate

its two chemical production plants located in the second living area of the Qinghe Oil Extraction Plant to the Bohai Marine Fine Chemical

Industrial Park (the “November 2017 Letter”).

Since then, our chemical factory has been shut down.

We believe this is part of the country’s efforts to improve

the development of the chemical industry, facilitate safe production and curb environmental pollution, and ensure the quality of living

environment of residents.

The Company expects to cost approximately $69 million in total in connection with the relocation.

incurred relocation costs in the amount of $45,584,344 as of December 31, 2024.

In January 2020, the Company received

the environmental protection approval by the government of Shouguang City, Shandong Province for the planned Yuxin Chemical factory.

of the new chemical facilities at Bohai Marine Fine Chemical Industrial Park commenced in June 2020, with the bulk of the civil engineering

works completed by the end of June 2021.

However, due to the supply chain issues as well as the electric restrictions in China, the delivery

of some equipment, along with the equipment installation and testing and beginning trial production at the chemical factory, was delayed.

On February 22, 2022, the Company announced that discussions with the government had led to an easing of electricity restrictions.

a result, the Company re-engaged with its suppliers to proceed with the production and delivery of the remainder of the equipment, aiming

to finish installation and begin testing and trial production.

At this stage, the Company also began preparation work for its application

for safety and environmental assessment.

Additionally, the procurement of the final equipment for our chemical factory has been postponed

until we have a better understanding of the potential for derivative bromine products.

We anticipate proceeding with the completion of

its chemical factory in due course.

However, in the event that the Chinese economy persists in its weakness and if we perceive this trend

to be ongoing, there is a possibility that the chemical factory could be repurposed for the production of Sodium-Ion batteries.

To date, our sales have been limited

to customers within the PRC, and we expect that our sales will remain primarily domestic for the immediate future.

Our marketing strategy

involves developing long-term ongoing working relationships with customers based on large multi-year agreements which foster mutually

advantageous relationships.

We compete with PRC domestic private

companies and state owned companies.

Certain state-owned and state backed competitors are more established and have more control of certain

resources in terms of pricing than we do.

We compete based on price, our reputation for quality, on-time delivery, our relationship with

suppliers and our geographical proximity to natural brine deposits in the PRC for bromine, crude salt and chemical productions.

believes that our stable quality, manufacturing processes and plant capacity for the production of bromine, crude salt and chemical products

are key considerations in awarding contracts in the PRC.

Our principal competitors in the

bromine business are Shandong Yuyuan Group Company Limited, Shandong Haihua Group Company Limited, Shandong Dadi Salt Chemical Group Company

Limited and Shandong Haiwang Chemical Company Limited, all of which produce bromine principally for use in their chemicals businesses

and sell part of the bromine produced to customers.

These companies may switch to selling bromine to the market if they no longer use

bromine in their chemical businesses.

Our principal competitors in the

crude salt business are Shandong Haiwang Chemical Company Limited, Shandong Haihua Group Company Limited, Shandong Weifang Longwei Industrial

Company Limited, Shandong Yuyuan Group Company Limited and Shandong Caiyangzi Saltworks.

Our principal competitors in the

chemical business are Beijing Shiji Zhongxing Energy Technology Co., Ltd, Yanan Chaozheng Nijiang Co., Ltd, Shandong Dacheng Pesticides

Company Limited, Binhua Group Company Limited, Dongying City Dongchen (Group) Chemical Industry Company Limited, Beijing Peikangjiaye

Technologies Limited, Shouguang Fukang Pharmaceutical Co., Ltd.

Shandong Xinhua Pharmaceutical Limited by Share Ltd, Hunan Erkang Pharmaceutical

Limited by Share Ltd and Xinan Synthetic Pharmaceutical Limited by Share Ltd.

Government Regulation and Permissions Required from

the PRC Authorities for Our Operations

Since all of our operations are

conducted in China through our PRC wholly-owned subsidiaries, the Chinese government has significant authority in regulating our operations

and may intervene or influence our operations at any time, which could result in a material adverse change in our operations and the value

of our common stock.

We believe this is part

of the country’s efforts to improve the development of the chemical industry, facilitate safe production and curb environmental

pollution, and ensure the quality of living environment of residents.

The Company expects to cost approximately $69 million in total

in connection with the relocation.

The Company incurred relocation costs in the amount of $45,584,344 as of December 31, 2025.

January 2020, the Company received the environmental protection approval by the government of Shouguang City, Shandong Province for the

planned Yuxin Chemical factory.

Construction of the new chemical facilities at Bohai Marine Fine Chemical Industrial Park commenced in

June 2020, with the bulk of the civil engineering works completed by the end of June 2021.

However, due to the supply chain issues as

well as the electric restrictions in China, the delivery of some equipment, along with the equipment installation and testing and beginning

trial production at the chemical factory, was delayed.

On February 22, 2022, the Company announced that discussions with the government

had led to an easing of electricity restrictions.

As a result, the Company re-engaged with its suppliers to proceed with the production

and delivery of the remainder of the equipment, aiming to finish installation and begin testing and trial production.

At this stage,

the Company also began preparation work for its application for safety and environmental assessment.

Additionally, the procurement of

the final equipment for our chemical factory has been postponed until we have a better understanding of the potential for derivative

bromine products.

We anticipate proceeding with the completion of its chemical factory in due course.

However, in the event that the

Chinese economy persists in its weakness and if we perceive this trend to be ongoing, there is a possibility that the chemical factory

could be repurposed for the production of Sodium-Ion batteries.

date, our sales have been limited to customers within the PRC, and we expect that our sales will remain primarily domestic for the immediate

Our marketing strategy involves developing long-term ongoing working relationships with customers based on large multi-year agreements

which foster mutually advantageous relationships.

compete with PRC domestic private companies and state-owned companies.

Certain state owned and state backed competitors are more established

and have more control of certain resources in terms of pricing than we do.

We compete based on price, our reputation for quality, on-time

delivery, our relationship with suppliers and our geographical proximity to natural brine deposits in the PRC for bromine, crude salt

and chemical productions.

Management believes that our stable quality, manufacturing processes and plant capacity for the production

of bromine, crude salt and chemical products are key considerations in awarding contracts in the PRC.

principal competitors in the bromine business are Shandong Yuyuan Group Company Limited, Shandong Haihua Group Company Limited, Shandong

Dadi Salt Chemical Group Company Limited and Shandong Haiwang Chemical Company Limited, all of which produce bromine principally for

use in their chemicals businesses and sell part of the bromine produced to customers.

These companies may switch to selling bromine to

the market if they no longer use bromine in their chemical businesses.

principal competitors in the crude salt business are Shandong Haiwang Chemical Company Limited, Shandong Haihua Group Company Limited,

Shandong Weifang Longwei Industrial Company Limited, Shandong Yuyuan Group Company Limited and Shandong Caiyangzi Saltworks.

principal competitors in the chemical business are Beijing Shiji Zhongxing Energy Technology Co., Ltd, Yanan Chaozheng Nijiang Co., Ltd,

Shandong Dacheng Pesticides Company Limited, Binhua Group Company Limited, Dongying City Dongchen (Group) Chemical Industry Company Limited,

Beijing Peikangjiaye Technologies Limited, Shouguang Fukang Pharmaceutical Co., Ltd.

Shandong Xinhua Pharmaceutical Limited by Share

Ltd, Hunan Erkang Pharmaceutical Limited by Share Ltd and Xinan Synthetic Pharmaceutical Limited by Share Ltd.

Regulation and Permissions Required from the PRC Authorities for Our Operations

all of our operations are conducted in China through our PRC subsidiaries, the Chinese government has significant authority in regulating

our operations and may intervene or influence our operations at any time, which could result in a material adverse change in our operations

and the value of our common stock.

see “ Item 1A.

Risk Factors — Risks Related to Doing Business in China.

The following is a summary of

the principal governmental laws and regulations that are applicable to our operations in the PRC.

The scope and enforcement of many of

the laws and regulations described below are uncertain.

We cannot predict the effect of further developments in the Chinese legal system,

including the promulgation of new laws, changes to existing laws or the interpretation or enforcement of laws.

For more details, see “ Item

Risk Factors — Risks Related to Doing Business in China — Uncertainties with respect to the PRC legal system could adversely

China has been reinforcing the

environmental requirements for the entire chemical industry, demanding the closure or rectification of those factories that do not meet

the emission requirements and are highly polluting.

In early 2017, the government announced the closure or relocation of those chemical

industry facilities that are close to residential areas, and the new environmental law officially came into full effect in January 2018.

In the natural resources sector,

the PRC and the various provinces have enacted a series of laws and regulations over the past 20 years, including laws and regulations

designed to improve safety and decrease environmental degradation.

The “China Mineral Resources Law” declares state ownership

of all mineral resources in the PRC.

However, mineral exploration rights can be purchased, sold and transferred to foreign owned companies.

Mineral resource rights are granted by the Central Government permitting recipients to conduct mineral resource activities in a specific

area during the license period.

These rights entitle the licensee to undertake mineral resource activities and infrastructure and ancillary

work, in compliance with applicable laws and regulations, within the specific area covered by the license during the license period.

licensee is required to submit a proposal and feasibility studies to the relevant authority and to pay the Central Government a natural

resources tax in an amount equal to a percent of annual crude salt sales and tones of bromine sold.

Shandong Province has determined that

bromine is to be extracted only by licensed entities, and we hold one of such licenses.

Despite the Province desire to limit extraction

to licensed entities hundreds of smaller operations have continued to extract bromine without licenses.

The Ministry of Land and Resources

(“MLR”) is the principal regulator of mineral rights in China.

The Ministry has authority to grant licenses for land-use and

exploration rights, issue permits for mineral rights and leases, oversee the fees charged for them and their transfer, and review reserve

We are required to hold a bromine and salt production license in order to operate our bromine and salt production business

following is a summary of the principal governmental laws and regulations that are or may be applicable to our operations in the PRC.

The scope and enforcement of many of the laws and regulations described below are uncertain.

We cannot predict the effect of further

developments in the Chinese legal system, including the promulgation of new laws, changes to existing laws or the interpretation or enforcement

For more details, see “Item 1A.

Risk Factors — Risks Related to Doing Business in China — Uncertainties

with respect to the PRC legal system could adversely affect us.”

has been reinforcing the environmental requirements for the entire chemical industry, demanding the closure or rectification of those

factories that do not meet the emission requirements and are highly polluting.

In early 2017, the government announced the closure or

relocation of those chemical industry facilities that are close to residential areas, and the new environmental law officially came into

full effect in January 2018.

the natural resources sector, the PRC and the various provinces have enacted a series of laws and regulations over the past 20 years,

including laws and regulations designed to improve safety and decrease environmental degradation.

The “China Mineral Resources

Law” declares state ownership of all mineral resources in the PRC.

However, mineral exploration rights can be purchased, sold and

transferred to foreign owned companies.

Mineral resource rights are granted by the Central Government permitting recipients to conduct

mineral resource activities in a specific area during the license period.

These rights entitle the licensee to undertake mineral resource

activities and infrastructure and ancillary work, in compliance with applicable laws and regulations, within the specific area covered

by the license during the license period.

The licensee is required to submit a proposal and feasibility studies to the relevant authority

and to pay the Central Government a natural resources tax in an amount equal to a percentage of annual crude salt sales and tones of

bromine sold.

Shandong Province has determined that bromine is to be extracted only by licensed entities, and we hold one of such licenses.

Despite the Province desire to limit extraction to licensed entities, hundreds of smaller operations have continued to extract bromine

without licenses.

Ministry of Land and Resources (“MLR”) is the principal regulator of mineral rights in China.

The Ministry has authority

to grant licenses for land-use and exploration rights, issue permits for mineral rights and leases, oversee the fees charged for them

and their transfer, and review reserve evaluations.

We are required to hold a bromine and salt production license in order to operate

our bromine and salt production business in the PRC.

Our bromine and salt production license is subject to a yearly audit.

If we do not successfully pass the yearly approval by

relevant government authorities, our bromine and salt production operations may be suspended until we are able to comply with the license

requirements which could have a material adverse effect on our business, financial condition and results of operations.

In April 2022, our subsidiary,

Shouguang Hengde Salt Industry Co.

Ltd, was incorporated in Shandong Province, China, specifically for crude salt production and trading.

This subsidiary was established in response to a new government policy mandating separate registrations for bromine and crude salt companies.

As of the date of this annual report, the Company is awaiting governmental approval for Factories No.

We engage in the manufacturing

and trading of bromine through our PRC wholly-owned subsidiary, Shouguang City Haoyuan Chemical Company Limited (“SCHC”),

which holds the licenses for bromine and crude salt mining and production.

successfully pass the yearly approval by relevant government authorities, our bromine and salt production operations may be suspended

until we are able to comply with the license requirements which could have a material adverse effect on our business, financial condition

and results of operations.

April 2022, our subsidiary, Shouguang Hengde Salt Industry Co.

Ltd, was incorporated in Shandong Province, China, specifically for crude

salt production and trading.

This subsidiary was established in response to a new government policy mandating separate registrations

for bromine and crude salt companies.

As of the date of this annual report, the Company is awaiting governmental approval for Factories

engage in the manufacturing and trading of bromine through our PRC wholly-owned subsidiary, Shouguang City Haoyuan Chemical Company Limited

(“SCHC”), which holds the licenses for bromine and crude salt mining and production.

Shouguang Hengde Salt Industry Co.

is in the business of trading crude salt.

(“SHSI”) is in the business of trading crude salt.

No operational license is required for such business activity.

Shouguang Yuxin Chemical Industry

Company Limited (“SYCI”) had entered into an equity transfer agreement with Shandong Rongyuan Pharmaceutical Co., Ltd.

“Purchaser”) to sell 100% of the equity interests of SYCI.

To further explore and develop natural gas and brine resources

(including bromine and crude salt) within the PRC in Sichuan Province, the Company established Daying County Haoyuan Chemical Company

Limited (“DCHC”).

DCHC is currently in discussions with government authorities regarding permits for mining natural gas and

halogen water.

Recently, the PRC government

has initiated a series of regulatory actions and made a number of public statements on offerings that are conducted overseas and/or

involved foreign investment in China-based issuers, including the “Opinions on Severely Cracking Down on Illegal Securities

Activities According to Law,” or the Opinions, (promulgated by the General Office of the Central Committee of the Communist

Shouguang Yuxin Chemical Industry Company Limited (“SYCI”) had entered into an equity transfer agreement with Shandong Rongyuan

Pharmaceutical Co., Ltd.

(the “Purchaser”) to sell 100% of the equity interests of SYCI.

To further explore and develop natural

gas and brine resources (including bromine and crude salt) within the PRC in Sichuan Province, the Company established Daying County

Haoyuan Chemical Company Limited (“DCHC”).

DCHC is currently in discussions with government authorities regarding permits

for mining natural gas and halogen water.

the PRC government has initiated a series of regulatory actions and made a number of public statements on offerings that are conducted

overseas and/or involved foreign investment in China-based issuers, including the “Opinions on Severely Cracking Down on Illegal

Securities Activities According to Law,” or the Opinions, (promulgated by the General Office of the Central Committee of the Communist

Party of China and the General Office of the State Council on July 6, 2021).

The Opinions emphasized the need to strengthen the

administration over illegal securities activities, and the need to strengthen the supervision over overseas listings by Chinese

Given the current PRC regulatory environment, it is uncertain when and whether we or our PRC subsidiaries, will be

required to obtain permission from the PRC government to list on U.S.

exchanges in the future, and even when such permission is

obtained, whether it will be denied or rescinded.

We have been closely monitoring regulatory developments in China regarding any

necessary approvals from the CSRC or other PRC governmental authorities required for overseas listings.

As of the date of this

annual report, we have not received any inquiry, notice, warning, sanctions or regulatory objection to listing on U.S.

exchange from

the CSRC or other PRC governmental authorities.

However, there remains significant uncertainty as to the enactment, interpretation

and implementation of regulatory requirements related to overseas securities offerings and other capital markets activities.

On February 17, 2023, the CSRC

released the Trial Administrative Measures for Administration of Overseas Securities Offerings and Listings by Domestic Companies (the

“Trial Measures”) and five supporting guidelines, which came into effect on March 31, 2023.

Pursuant to the Trial Measures,

domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill the filing procedures

and report relevant information to the CSRC.

If a domestic company fails to complete the filing procedures or conceals any material fact

or falsifies any major content in its filing documents, such domestic company may be subject to administrative penalties by the CSRC,

such as order to rectify, warnings, fines, and its controlling shareholders, actual controllers, the person directly in charge and other

directly liable persons may also be subject to administrative penalties, such as warnings and fines.

As a listed company, we believe that

we and all of our PRC subsidiaries are not required to fulfill filing procedures and obtain approvals from the CSRC to continue to offer

our securities or operate our business as of the date of this annual report.

In addition, to date, none of us and our PRC subsidiaries

has received any filing or compliance requirements from CSRC for the listing of the Company at Nasdaq and all of its overseas offerings.

Furthermore, based on our understanding of the current PRC laws, we believe that the CSRC’s approval is not required to be obtained

for the Company’s listing on Nasdaq;

however, there are substantial uncertainties regarding the interpretation and application of

the Regulation on Mergers and Acquisitions of Domestic Companies by Foreign Investors(“M&A Rules”), other PRC Laws and

future PRC laws and regulations, and there can be no assurance that any governmental agency will not take a view that is contrary to or

otherwise different from our belief stated herein.

On February 24, 2023, the CSRC

published the Provisions on Strengthening the Confidentiality and Archives Administration Related to the Overseas Securities Offering

and Listing by Domestic Enterprises (the “Provisions on Confidentiality and Archives Administration”), which came into effect

on March 31, 2023.

The Provisions on Confidentiality and Archives Administration require that, in the process of overseas issuance and

listing of securities by domestic entities, the domestic entities, and securities companies and securities service institutions that provide

relevant securities service shall strictly implement the provisions of relevant laws and regulations and the requirements of these provisions,

establish and improve rules on confidentiality and archives administration.

Where the domestic entities provide with or publicly disclose

documents, materials or other items related to the state secrets and government work secrets to the relevant securities companies, securities

service institutions, overseas regulatory authorities, or other entities or individuals, the companies shall apply for approval of competent

departments with the authority of examination and approval in accordance with law and report the matter to the secrecy administrative

departments at the same level for record filing.

Where there is unclear or controversial whether or not the concerned materials are related

to state secrets, the materials shall be reported to the relevant secrecy administrative departments for determination.

However, there

remain uncertainties regarding the further interpretation and implementation of the Provisions on Confidentiality and Archives Administration.

As of the date of this annual

report, we and our PRC subsidiaries have obtained all requisite licenses and permits from thePRC government authorities needed for the

business operations of our PRC subsidiaries in China, and no permission or approval has been denied.

Further, the Company is awaiting

governmental approval for Factories No.

2 and No.10 as of the date of this annual report.

For more details, please see “Item 1.

The Opinions emphasized the need to strengthen the administration

over illegal securities activities, and the need to strengthen the supervision over overseas listings by Chinese companies.

current PRC regulatory environment, it is uncertain when and whether we or our PRC subsidiaries, will be required to obtain permission

from the PRC government to list on U.S.

exchanges in the future, and even when such permission is obtained, whether it will be denied

or rescinded.

We have been closely monitoring regulatory developments in China regarding any necessary approvals from the CSRC or other

PRC governmental authorities required for overseas listings.

As of the date of this annual report, we have not received any inquiry,

notice, warning, sanctions or regulatory objection to listing on U.S.

exchange from the CSRC or other PRC governmental authorities.

there remains significant uncertainty as to the enactment, interpretation and implementation of regulatory requirements related to overseas

securities offerings and other capital markets activities.

February 17, 2023, the CSRC released the Trial Administrative Measures for Administration of Overseas Securities Offerings and Listings

by Domestic Companies (the “Trial Measures”) and five supporting guidelines, which came into effect on March 31, 2023.

to the Trial Measures, domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill

the filing procedures and report relevant information to the CSRC.

If a domestic company fails to complete the filing procedures or conceals

any material fact or falsifies any major content in its filing documents, such domestic company may be subject to administrative penalties

by the CSRC, such as order to rectify, warnings, fines, and its controlling shareholders, actual controllers, the person directly in

charge and other directly liable persons may also be subject to administrative penalties, such as warnings and fines.

As a listed company,

we believe that we and all of our PRC subsidiaries are not required to fulfill filing procedures and obtain approvals from the CSRC to

continue to offer our securities or operate our business as of the date of this annual report.

In addition, to date, none of us and our

PRC subsidiaries has received any filing or compliance requirements from CSRC for the listing of the Company at Nasdaq and all of its

overseas offerings.

Furthermore, based on our understanding of the current PRC laws, we believe that the CSRC’s approval is not

required to be obtained for the Company’s listing on Nasdaq;

however, there are substantial uncertainties regarding the interpretation

and application of the Regulation on Mergers and Acquisitions of Domestic Companies by Foreign Investors (“M&A Rules”),

other PRC Laws and future PRC laws and regulations, and there can be no assurance that any governmental agency will not take a view that

is contrary to or otherwise different from our belief stated herein.

February 24, 2023, the CSRC published the Provisions on Strengthening the Confidentiality and Archives Administration Related to the

Overseas Securities Offering and Listing by Domestic Enterprises (the “Provisions on Confidentiality and Archives Administration”),

which came into effect on March 31, 2023.

The Provisions on Confidentiality and Archives Administration require that, in the process

of overseas issuance and listing of securities by domestic entities, the domestic entities, and securities companies and securities service

institutions that provide relevant securities service shall strictly implement the provisions of relevant laws and regulations and the

requirements of these provisions, establish and improve rules on confidentiality and archives administration.

Where the domestic entities

provide with or publicly disclose documents, materials or other items related to the state secrets and government work secrets to the

relevant securities companies, securities service institutions, overseas regulatory authorities, or other entities or individuals, the

companies shall apply for approval of competent departments with the authority of examination and approval in accordance with law and

report the matter to the secrecy administrative departments at the same level for record filing.

Where there is unclear or controversial

whether or not the concerned materials are related to state secrets, the materials shall be reported to the relevant secrecy administrative

departments for determination.

However, there remain uncertainties regarding the further interpretation and implementation of the Provisions

on Confidentiality and Archives Administration.

of the date of this annual report, we and our PRC subsidiaries have obtained all requisite licenses and permits from the PRC government

authorities needed for the business operations of our PRC subsidiaries in China, and no permission or approval has been denied.

the Company is awaiting governmental approval for Factories No.

10 as of the date of this annual report.

For more details,

please see “Item 1.

Business - Business Strategy- Expansion of Production Capacity to Meet Demand.”

As of the date of this annual

report, we and our PRC subsidiaries have not been involved in any investigations or review initiated by any PRC regulatory

authority, not having any of them received any inquiry, notice or sanction for the business operation, accepting foreign investment or

listing on the Nasdaq Stock Market.

In addition, as of the date of this annual report, we believe that under the currently effective

PRC laws and regulations, we and our PRC subsidiaries are not required to obtain approval or permission from the CSRC or the CAC or

any other entity that is required to approve our PRC subsidiaries’ operations or required for us to offer securities to

of the date of this annual report, we and our PRC subsidiaries have not been involved in any investigations or review initiated by any

PRC regulatory authority, not having any of them received any inquiry, notice or sanction for the business operation, accepting foreign

investment or listing on the Nasdaq Stock Market.

In addition, as of the date of this annual report, we believe that under the currently

effective PRC laws and regulations, we and our PRC subsidiaries are not required to obtain approval or permission from the CSRC or the

CAC or any other entity that is required to approve our PRC subsidiaries’ operations or required for us to offer securities to

foreign investors under any currently effective PRC laws, regulations, and regulatory rules.

1 unchanged sentence

to filing requirements imposed by the CSRC under the Overseas Listing Regulations or approvals from other PRC regulatory authorities

or other procedures, including the cybersecurity review under the revised Cybersecurity Review Measures, for our future offshore

offerings, it would be uncertain whether we can or how long it will take us to complete such procedures or obtain such approval and

any such approval could be rescinded.

Any failure to obtain or delay in completing such procedures or obtaining such approval for

our offshore offerings, or a rescission of any such approval is obtained by us, would subject us to sanctions by the CSRC or other

PRC regulatory authorities for failure to file with the CSRC or failure to seek approval from other government authorization for our

offshore offerings.

These regulatory authorities may impose fines and penalties on our operations in China, limit our ability to pay

dividends outside of China, limit our operating privileges in China, delay or restrict the repatriation of the proceeds from our

offshore offerings into China or take other actions that could materially and adversely affect our business, financial condition,

results of operations, and prospects, as well as the trading price of our common stock.

The CSRC or other PRC regulatory authorities

also may take actions requiring us, or making it advisable for us, to halt our offshore offerings before settlement and delivery of

the securities offered.

Consequently, if investors engage in market trading or other activities in anticipation of and prior to

settlement and delivery, they do so at the risk that settlement and delivery may not occur.

In addition, if the CSRC or other

regulatory authorities later promulgate new rules or explanations requiring that we obtain their approvals or accomplish the

required filing or other regulatory procedures for our prior offshore offerings, we may be unable to obtain a waiver of such

approval requirements, if and when procedures are established to obtain such a waiver.

Any uncertainties or negative publicity

regarding such approval requirement could materially and adversely affect our business, prospects, financial condition, reputation,

and the trading price of our common stock.

Given the uncertainties of interpretation

and implementation of laws and regulations and the enforcement practice by government authorities, we may be required to obtain additional

licenses, permits, filings or approvals for our business and operations in the future.

We cannot assure you that we will be able to obtain,

in a timely manner or at all, or maintain such licenses, permits or approvals, and we may also inadvertently conclude that such permissions

or approvals are not required.

Any lack of or failure to maintain requisite approvals, licenses or permits applicable to us or our PRC

subsidiaries may have a material adverse impact on our business, results of operations, financial condition and prospects, significantly

limit or completely hinder our ability to offer or continue to offer securities to investors, and cause the value of our securities to

significantly decline or become worthless.

or other procedures, including the cybersecurity review under the revised Cybersecurity Review Measures, for our future offshore offerings,

it would be uncertain whether we can or how long it will take us to complete such procedures or obtain such approval and any such approval

could be rescinded.

Any failure to obtain or delay in completing such procedures or obtaining such approval for our offshore offerings,

or a rescission of any such approval is obtained by us, would subject us to sanctions by the CSRC or other PRC regulatory authorities

for failure to file with the CSRC or failure to seek approval from other government authorization for our offshore offerings.

These regulatory

authorities may impose fines and penalties on our operations in China, limit our ability to pay dividends outside of China, limit our

operating privileges in China, delay or restrict the repatriation of the proceeds from our offshore offerings into China or take other

actions that could materially and adversely affect our business, financial condition, results of operations, and prospects, as well as

the trading price of our common stock.

The CSRC or other PRC regulatory authorities also may take actions requiring us, or making it

advisable for us, to halt our offshore offerings before settlement and delivery of the securities offered.

Consequently, if investors

engage in market trading or other activities in anticipation of and prior to settlement and delivery, they do so at the risk that settlement

and delivery may not occur.

In addition, if the CSRC or other regulatory authorities later promulgate new rules or explanations requiring

that we obtain their approvals or accomplish the required filing or other regulatory procedures for our prior offshore offerings, we

may be unable to obtain a waiver of such approval requirements, if and when procedures are established to obtain such a waiver.

Any uncertainties

or negative publicity regarding such approval requirement could materially and adversely affect our business, prospects, financial condition,

reputation, and the trading price of our common stock.

the uncertainties of interpretation and implementation of laws and regulations and the enforcement practice by government authorities,

we may be required to obtain additional licenses, permits, filings or approvals for our business and operations in the future.

assure you that we will be able to obtain, in a timely manner or at all, or maintain such licenses, permits or approvals, and we may

also inadvertently conclude that such permissions or approvals are not required.

Any lack of or failure to maintain requisite approvals,

licenses or permits applicable to us or our PRC subsidiaries may have a material adverse impact on our business, results of operations,

financial condition and prospects, significantly limit or completely hinder our ability to offer or continue to offer securities to investors,

and cause the value of our securities to significantly decline or become worthless.

For more details, see “ Item 1A.

Risk Factors - Risks Related to Doing Business in

China - If the Chinese government were to impose new requirements for approval from the PRC Authorities to issue our common stock to foreign

investors or list on a foreign exchange, such action could significantly limit or completely hinder our ability to offer or continue to

offer securities to investors and cause the value of such securities to significantly decline or be worthless.

Human Capital Resources

Employee Profiles

As of December 31, 2024, we employed

approximately 367 full-time employees, of whom approximately 77% are with SCHC, SHSI

and DCHC, and 23% are with SYCI.

- Risks Related to Doing Business in China - If the Chinese government were to impose new requirements for approval from the PRC Authorities

to issue our common stock to foreign investors or list on a foreign exchange, such action could significantly limit or completely hinder

our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or

be worthless.”

has been reinforcing the environmental requirements for the entire chemical industry, demanding the closure or rectification of those

factories that do not meet the emission requirements and are highly polluting.

In early 2017, the government announced the closure or

relocation of those chemical industry facilities that are close to residential areas, and the new environmental law officially came into

full effect in January 2018.

following is a summary of the principal governmental laws and regulations that are or may be applicable to our operations in the PRC.

The scope and enforcement of many of the laws and regulations described below are uncertain.

We cannot predict the effect of further

developments in the Chinese legal system, including the promulgation of new laws, changes to existing laws or the interpretation or enforcement

the natural resources sector, the PRC and the various provinces have enacted a series of laws and regulations over the past 20 years,

including laws and regulations designed to improve safety and decrease environmental degradation.

The “China Mineral Resources

Law” declares state ownership of all mineral resources in the PRC.

However, mineral exploration rights can be purchased, sold and

transferred to foreign owned companies.

Mineral resource rights are granted by the Central Government permitting recipients to conduct

mineral resource activities in a specific area during the license period.

These rights entitle the licensee to undertake mineral resource

activities and infrastructure and ancillary work, in compliance with applicable laws and regulations, within the specific area covered

by the license during the license period.

The licensee is required to submit a proposal and feasibility studies to the relevant authority

and to pay the Central Government a natural resources tax in an amount equal to a percent of annual crude salt sales and tones of bromine

Shandong Province has determined that bromine is to be extracted only by licensed entities, and we hold one of such licenses.

the Province desire to limit extraction to licensed entities hundreds of smaller operations have continued to extract bromine without

Ministry of Land and Resources (“MLR”) is the principal regulator of mineral rights in China.

The Ministry has authority

to grant licenses for land-use and exploration rights, issue permits for mineral rights and leases, oversee the fees charged for them

and their transfer, and review reserve evaluations.

We are required to hold a bromine and salt production license in order to operate

our bromine and salt production business in the PRC.

Our bromine and salt production license is subject to a yearly audit.

successfully pass the yearly approval by relevant government authorities, our bromine and salt production operations may be suspended

until we are able to comply with the license requirements which could have a material adverse effect on our business, financial condition

and results of operations.

Capital Resources

of December 31, 2025, we employed approximately 355 full-time employees, of whom approximately 79% are with SCHC, SHSI and DCHC, and

21% are with SYCI.

Approximately 30% of our employees are management personnel and 5% are sales and procurement staff.

of our employees are represented by a union.

Total Rewards

Our compensation program is designed

to attract and reward talented individuals who possess the skills necessary to support our business objectives, assist in the achievement

of our strategic goals and create long-term value for our stockholders.

Our employees in China participate in a state pension arrangement

organized by Chinese municipal and provincial governments.

We are required to contribute to the arrangement at the rate of 16% of the

average monthly salary.

In addition, we are required by Chinese law to cover employees in China with other types of social insurance.

None of our employees

are represented by a union.

compensation program is designed to attract and reward talented individuals who possess the skills necessary to support our business

objectives, assist in the achievement of our strategic goals and create long-term value for our stockholders.

Our employees in China

participate in a state pension arrangement organized by Chinese municipal and provincial governments.

We are required to contribute to

the arrangement at the rate of 16% of the average monthly salary.

In addition, we are required by Chinese law to cover employees in China

with other types of social insurance.

We have purchased social insurance for almost all of our employees.

Expense related to social insurance was approximately $535,475 for

fiscal year 2024.

Health and Safety

The success of our business is

fundamentally connected to the well-being of our people.

Accordingly, we are committed to the health, safety and wellness of our employees.

We provide our employees and their families with access to a variety of flexible and convenient health and welfare programs, including

benefits that support their physical and mental health by providing tools and resources to help them improve or maintain their health

and that offer choice where possible so they can customize their benefits to meet their needs and the needs of their families.

In response to the COVID-19 pandemic, we implemented significant operating environment changes that we determined were in the best interest

of our employees, as well as the communities in which we operate, and which comply with government regulations.

This includes having the

vast majority of our employees work from home, while implementing additional safety measures for employees continuing critical on-site

A core tenet of our talent system

is to both develop talent from within and supplement with external hires.

This approach has yielded loyalty and commitment in our employee

base which in turn grows our business, our products, and our customers, while adding new employees and external ideas supports a continuous

improvement mindset and our goals of a diverse and inclusive workforce.

Our talent acquisition team uses internal and external resources

to recruit highly skilled and talented workers in the PRC, and we encourage employee referrals for open positions.

Available Information

We make available free of charge

on or through our internet website, www.gulfresourcesinc.com, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current

Reports on Form 8-K, including exhibits, and all amendments to those reports, if any, filed or furnished pursuant to Section 13(a) or

15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after they are electronically filed with, or furnished

to, the Securities and Exchange Commission.

The SEC maintains an Internet site that contains reports, proxy and information statements,

and other information regarding issuers like our Company that file electronically with the SEC at http://www.sec.gov.

The information

contained on our website is not intended to be incorporated into this Annual Report on Form 10-K.

Expense related to social insurance

was approximately $508,947 for fiscal year 2025.

success of our business is fundamentally connected to the well-being of our people.

Accordingly, we are committed to the health, safety

and wellness of our employees.

We provide our employees and their families with access to a variety of flexible and convenient health

and welfare programs, including benefits that support their physical and mental health by providing tools and resources to help them

improve or maintain their health status;

and that offer choice where possible so they can customize their benefits to meet their needs

and the needs of their families.

In response to the COVID-19 pandemic, we implemented significant operating environment changes that

we determined were in the best interest of our employees, as well as the communities in which we operate, and which comply with government

This includes having the vast majority of our employees work from home, while implementing additional safety measures for

employees continuing critical on-site work.

core tenet of our talent system is to both develop talent from within and supplement with external hires.

This approach has yielded loyalty

and commitment in our employee base which in turn grows our business, our products, and our customers, while adding new employees and

external ideas supports a continuous improvement mindset and our goals of a diverse and inclusive workforce.

Our talent acquisition team

uses internal and external resources to recruit highly skilled and talented workers in the PRC, and we encourage employee referrals for

open positions.

make available free of charge on or through our internet website, www.gulfresourcesinc.com, our Annual Reports on Form 10-K, Quarterly

Reports on Form 10-Q, Current Reports on Form 8-K, including exhibits, and all amendments to those reports, if any, filed or furnished

pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after they are electronically

filed with, or furnished to, the Securities and Exchange Commission.

The SEC maintains an Internet site that contains reports, proxy

and information statements, and other information regarding issuers like our Company that file electronically with the SEC at http://www.sec.gov.

The information contained on our website is not intended to be incorporated into this Annual Report on Form 10-K.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K/A

Item 1. Business